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TMI Blog2022 (1) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... itted by the SRA has filed an affidavit stating that they feel duty bound to reconsider their decision in larger public interest resulting from unprecedent haircut of 95% observations of the Adjudicating Authority as also this Appellate Tribunal. HELD THAT:- Power to reconsider any decision is within the domain of CoC and even Hon ble Apex Court in Catena of judgment held that the commercial wisdom of the CoCs is non justifiable and hence, it is in the domain of CoC, particularly, if at a later stage, it finds in public interest and the amount of loss which the public exchequer is to bear with such unprecedented haircut in such a large fund employment, it is in the fitness of thing that the proposal can be remanded back to the CoC, particularly, in view of their own affidavit to review their decision. The CoC is not functus officio on the approval of the Resolution plan and accordingly, the judicial precedents clearly established that the Adjudicating Authority and this Tribunal is competent to send back the Resolution plan to the CoC for reconsideration. The Hon ble Supreme Court decision in Committee of Creditors of Essar Steel India Ltd, Through authorized signatory Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hreyas Edupuganti, Advocates for R-2. Mr. Tushar Mehta, Solicitor General, with Biswajit Dubey, Ms. Surabhi Khattar and Mr. Madhav Kanoria Mr. Kanu Agarwal and Mr. Prafful Goyal Advocates for COC. JUDGMENT DR. ASHOK KUMAR MISRHA, TECHNICAL MEMEBR Contents: SL No. Particulars Para No. Page No. A. Brief Background 04-08 12-16 B. Submissions by the parties 09-18 17-174 C. Analysis of facts, law and reasons 19-49 174-212 D. Conclusion 50 213 1. All these appeals have been filed by the Appellants' under Section 61 of the Insolvency and Bankruptcy Code, 2016 (in short Code ) against the impugned order dated 08.06.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court No.II at Mumbai) in IA No. 196/2021 in CP (IB) No. 02/MB/C-II/2018 and CP (IB) 01/MB/C-II/2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies (12 domestic subsidiary) and their lenders entered into a Syndicated Rupee Term Loan Agreement dated 08.08.2012 as-obligor - co-obligator on the one hand and the banks and financial institutions as the group of lenders with SBI as Facility Agent and SBICaps Trustee Company Limited as the onshore Security Trustee. Entities of Videocon group with respective orders were under CIRP and the action taken by the lead bank i.e. SBI under Section 7 of the Code and few companies who are also part of the group, certain Operational Creditors (OC) had filed insolvency petition. List of 13 Videocon group companies taken from Form- H- Compliance Certificate given by RP at 70 of the Appeal paper book in CA(AT) (Ins) No. 505 of 2021. Table - 1 Sl No. Name of the Videocon group company Insolvency commencement date Date of appointment of the IRP Date of appointment of RP 1. Videocon Telecommunications limited 11.06.2018 11.06.2018 10.07.2018 2. Electroworld Digital Solutions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) out of the 15 Videocon Group companies. CIRP of two companies i.e KAIL Limited and Trend Electronics Limited to run independently. 6. As per information available in CA(AT) (Ins) No. 503/2021, page 14 of the Appeal paper book, total claims of Rs. 72,078.5 Crore has been filed out of which claims of Rs. 64,637.6 Crore had been verified and accepted for the purpose of CIRP by the RP. It was stated that the plan provides for a meagre amount of Rs. 2962.02 Crore against an admitted liability of approx. Rs. 65,000 Crore. The said waiver is almost Rs. 62,000 Crore of admitted claims Rs. 69,000 crore of total claims whereby this public money is lost, haircut is approx. over 95%. Even the claims of the Financial Creditors have been settled below 5% while that of OC (Operational Creditor) is hardly 0.72%. 7. It is also revealed that the Resolution Plan of Successful Resolution Applicant (SRA) was approved by the CoC by 95.09 % voting share. However, the Assenting Financial Creditors (AFC) constituting 94.98%, who have approved the Resolution Plan submitted by the SRA has filed an affidavit stating that they feel duty bound to reconsider their decision in larger public inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Plan provisions page 51 of the Appeal Paper Book) and total amount payable to dissenting Financial Creditor is Rs. 105.23 Crore whereas as per Distribution Sheet , it was Rs. 114.21 Crore (page 196 197 of the Appeal Paper Book). ii. It was also submitted by the Ld. Sr. Counsel for the Appellant bank that Section 30(2)(b) of the Code requires Resolution Professional to confirm that the Dissenting Financial Creditor will get an amount, which shall not be less than the amount to be paid to such creditors in the event of liquidation under Section 53 of the Code. From the above stated details, it is very much clear that they are being paid less than the liquidation value. So there is a non-compliance of the provisions of Section 30(2)(b) of the Code. These inputs are provided by the Resolution Professional for decision making of CoC. However, this has been belatedly violated in this case. iii. It was also stated by the Ld. Sr. Counsel for the Appellant that the Adjudicating Authority has made observations and directions to the CoC to make payments as per liquidation value to all Dissenting Financial Creditors in cash up-front. While the Resolution Plan also envisag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NCD issued to Assenting Financial Creditor . He has also stated that the Resolution Applicant provides for the purpose of computation of liquidation value only the upfront amount and the NCD proposed to be issued. The Dissenting Financial Creditors are not being issued equity shares. At the relevant time, NCD were proposed to be issued to the Dissenting Financial Creditor and the same was found to be in compliance to the Code and the CIRP regulation as per law as applicable at that time. He has also stated that the Resolution Plan will be in accordance with Jaypee Kensington as stated supra as the same was not available at that time. It is a settled law that commercial wisdom of the CoC is paramount and cannot be assailed. He has also stated that he is not responsible for compliance for SBI Caps suggestions for a particular modalities of distributions as they are the Process Advisor of the CoC. He has also done valuation through two valuers registered with IBBI . The distribution mechanism is said to have been done assuming that all Financial Creditors will vote in favour of the Resolution Plan and done prior to completion of voting. The distribution suggested by SBI C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Appeal No. 4626 of 2021 by Resolution Applicant which has directed to this Appellate Tribunal to decide the Appeal on the next date of hearing i.e. 07.09.2021. iv. The SRA has stated that the amount in Form H is an estimated amount and the final amount be determined at the time of payout which is T+ 44th day, with T being the date of approval of plan by the Adjudicating Authority. It is the commercial wisdom of the CoC to provide the hair cut of 95.05% and it is not available to judicial review. Citied multiple judgments as are enunciated below: K.Sashidhar Vs. Indian Overseas Bank 2019) 12 SCC 150; Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta (2020) SCC 531; Jaypee (Supra); Kalpraj Dharamshi Vs. Kotak Investment Advisors CA No. 2943 of 2020 and Ebix Singapore Private Limited Vs. Committee of Creditors of Educomp Solutions Limited CA No. 3224 of 2020 v. It has also stated that equitable considerations cannot influence the approval of the Resolution Plan, once the same has been approved by the CoC. It has also stated that the Resolution Plans and liquidation value relationship is relevant in view of the data av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Plans for the CD and out of that he has certified two Resolution Plan as compliance under the Code and accordingly, the same was put to vote and the Resolution Plan under challenge of Twin Star(R15) was approved by the CoC by 95.09% voting share. d. The Adjudicating Authority has also made certain observations regarding low value of the Resolution Pan and the hair cut being suffered by various classes of stakeholders as stated in para 5 6 of the impugned order dated 08.06.2021 and the same is also depicted below: OBSERVATIONS OF THE ADJUDICATING AUTHORITY Para -5. As per the CoC approved Resolution Plan, Assenting Secured Financial Creditors would get only 4.89%, Dissenting Secured Financial Creditors would get only 4.56%, Assenting Unsecured Financial Creditors would get only very meagre amount of 0.62%, Dissenting Unsecured Financial Creditors would get NIL/ ZERO amount and Operational Creditors would also get a very meagre amount of only 0.72%. Out of total claim amount of Rupees 71,433.75 Crore, claims admitted are for Rs 64,838.63 Cores and the plan is approved for an amount of only Rs 2962.02 Crore which is only 4.15% of the total outstanding clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals and the grounds raised in these Appeals, and considering the exceptional facts of present matter the Impugned Order is stayed till the next date and status quo ante as before passing of the Impugned Order is directed to be maintained. Resolution Professional will continue to manage the Corporate Debtors as per provisions of IBC till the next date . f. In the present appeal, assertions have been made by the Dissenting Financial Creditors about Non-Discloser of their respective share of the liquidation value which has resulted in them not being able to take a proper and prudent decision had they been knowing so they could have persuaded the Assenting Financial Creditors not to accept the Resolution Plan with such unprecedented huge haircut. This has necessitated a reconsideration by the CoC of the decision to accept the haircut of 95%. Considering the observations of the Adjudicating Authority and this Appellate Tribunal, Assenting Financial Creditor (AFC) majority of which are public sector banks and Financial institutions dealing with public money have to give serious consideration and weightage to the observations. Accordingly, in the fitness of thing, AFC has proposed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CoC to take a balance view on such unprecedented haircut including certain deficiencies in approving the Resolution Plan as observed by the Adjudicating Authority and the Appellate Tribunal while granting interim stay. iii. They have further submitted that this Appellate Tribunal has power to allow reconsideration of CoC s decision to approve a resolution plan. In this regard, the Hon ble Supreme Court in the case of Jaypee Kensignton Boulevard Apartment Welfare Association and others Vs. NBCC (India) limited and Ors., 2021 SCC Online SC 253 has recently held that in case a resolution plan requires modification, the Adjudicating Authority (which would include this Appellate Tribunal by virtue of the scheme of the Code) must send back the resolution plan to the CoC to consider the modifications, as so to afford an opportunity to the resolution applicant to modify the plan, and CoC may then re-consider the plan and vote upon the same. Relevant observations of the Hon ble Supreme Court in this regard is reproduced below: The submissions made on behalf of the IRP in this regard are correct that if the Adjudicating Authority was of the view that the plan did not meet with any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or sub- class of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include judicial review that is mentioned in Section 30(2)(e), as the provisions of the Code are also provisions of law for the time being in force. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors, the limited judicial review available is to see that the Committee of Creditors has taken into account the fact 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e corporate debtor does not become impossible for want of a most basic and essential element for the carrying on of such business, namely, electricity. This may, in turn, be accepted by the resolution applicant with a consequent modification as to distribution of funds, payment being provided to a certain type of operational creditor, namely, the electricity distribution company, out of upfront payment offered by the proposed resolution applicant which may also result in a consequent reduction of amounts payable to other financial and operational creditors. What is important is that it is the commercial wisdom of this majority of creditors which is to determine, through negotiation with the prospective resolution applicant, as to how and in what manner the corporate resolution process is to take place. The report of the Bankruptcy Law Reforms Committee, Volume I: Rationale and Design (November 2015) too had observed that the business decision regarding appropriate disposition of a defaulting company should be made solely by the CoC. The said observation has even been relied upon by the Hon ble Supreme Court in the case of Kalpraj Dharamshi Anr. Vs. Kotak Investment Advisors L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered is untenable. Further, reference to the Hon ble Supreme Court judgement in Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta and Ors., 2021 SCC OnLine SC 194, to avert that the Adjudicating Authority cannot do what the Code consciously did not provide it the power to do, is also incorrect and untenable. viii. It is also submitted that the power to revoke the approval is inherent within the power to approve to the CoC as well as the Adjudicating Authority. The Code need not expressly state powers, by way of separate provisions, which are understood to be implied in the powers expressly provided under the Code. Thus, the Adjudicating Authority and this Appellate Tribunal is fully empowered under the Code to send the matter back to CoC for reconsideration of its decision and the CoC is fully empowered to reconsider its decision. ix. It has also been stated by the Ld. SG the power to approve includes power to vary, modify and reconsider. It is also a wellsettled principle of law that the power to take a decision, also encompasses within it the power to modify, review and reconsider such decision [see Duli Chand Vs. State of Uttar Pradesh and Ors. Writ-C No. 45851 of 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Code and the IBBI (CIRP for Corporate Persons) Regulations, 2016 with respect to the treatment provided to Appellant being a Dissenting Financial creditors (DFC). The payment to DFCs in the form of NCD is not prescribed under law laid down as also the Resolution Plan lacks non-payment of upfront as required under Section 30 R/w Section 53 of Code. II. It is stated that Videocon Industries Limited (VIL) and its other group companies and their lenders entered into a syndicated Rupee Term Loan Agreement dated 08.08.2012 between VIL and its 12 domestic subsidiaries as Obligor-Co-obligor on one hand and the Banks and Financial Institutions as the group of lenders, with the SBI as Facility Agent and SBICAP as the Onshore Security Trustee. It is stated that vide letter dated 13.09.2013 the Appellant granted in principle agreement to participate in the syndicated RTL Facility to provide loan not exceeding Rs. 400 Crore to VIL. It is stated that the Appellant became party to the RTL by Deed of Accession Dated 23.09.2013. the Appellant craves leave to produce the Rupee Term Loan Agreement if required. III. It is also stated that apart from the assets covered under the Rupee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Liquidation Report summary was shared with the CoC at the 15th Meeting is actually an incorrect value as per the Appellant and such issues were raised by the Appellant. It is stated that it is pertinent to note that the CoC has not given explicit consent and approval to the liquidation value, however, it is just that no member except the Appellant has raised an objection to the same. The valuation reports themselves were made available to the CoC member through the Virtual Data Room. It is stated that as per the Appellant, the liquidation value that has been used by the CoC in its subsequent calculations, suffers from an arithmetic error in terms of (i) simplicitor transcription error in terms of the liquidation value of the Shahjahanpur property, (ii) double jeopardy to the liquidation value due to again deducting the values for VTL Cash Balances, after it has already been accounted for in the liquidation value calculation, (VTL cash balances refer to certain amounts of VTL which may be subject to the outcome of legal proceedings) and (iii)error in transcription between the values for secured and unsecured creditors admitted claims, as given by the RP and as used by the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of VTL cash balance on the distribution amounts. It has been recorded in the said meeting that the RP asked his team to discuss this issue with the present Applicant separately and try and address them at an early stage, however, no proper discussion or resolution was granted to the Applicant whatsoever. VIII. It is stated that in the 21st Meeting of the CoC as well, the concerns of the Appellant were similarly treated, in that it was reiterated by the RP that the Resolution Plan was complaint with the provisions of the Section 30(2) of the Code and Regulation 38(1)(b) of the Regulations. Reference may be had to the below paragraphs reproduced from the minutes of the 21st Meeting of the CoC. 2.IFCI query: IFCI raised their pending queries to the Chair, which was also e-mailed by IFCI to RP before the CoC meeting: VTL Cash Balance :IFCI raised that VTL cash balance is part of the liquidation value and accordingly should not be deducted for computing share of dissenting FCs. On the contrary, SBI caps has deducted INR 120.30 Crore towards VTL cash balance from submitted average LV. The RP responded that firstly, the distribution mechanism and the supporting calculations wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e litigation to the treatment of VTL cash balance at the time of arriving the liquidation value in the distribution mechanism. He maintained that the litigation matter is subjudice and would not be in a position to comment on the same. X. It is stated that the Appellant had filed the captioned IA No. 762 of 2021 before the Adjudicating Authority for essentially two prayers, which are summarized as under: a. Prayer for the payment of the liquidation value as per Section 30(2) of the Code payable to the Appellant as a dissenting financial Creditor and quantified at Rs. 70.31 crore, be paid in cash and upfront i.e. in priority to assenting financial creditors. b. Prayer to consider the correct value of the Videocon Telecommunications limited cash balance for the purpose of calculation of the liquidation value. XI. However, the Adjudicating Authority by its impugned order dated 08.06.2021 was pleased to approve the plan submitted by TSTL and was further pleased to dispose of the all the pending IA s including that of the Appellant with certain directions. XII. It is submitted that a bare perusal of the said Resolution Plan would evince that the same is not in conformity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le exercising its jurisdiction under the Code. By the way of the impugned order the Adjudicating Authority and recorded its restrictions in exercising jurisdiction over the commercial wisdom, but the impugned order does not even record the efforts on the part of the Adjudicating Authority to verify as to whether true and correct information has been provided to the CoC, whether the RP has completed his duty to maximize the valuation of the CD in the letter and spirit of the Code. XIV. It is also submitted that Section 30(2) contemplates treating the dissenting financial creditors as per the treatment they would have received under a liquidation scenario, in the very least. It is submitted that in the present resolution plan under consideration, the plan will put the application, as a dissenting financial creditor in a position even worse than in a liquidation scenario. It is submitted that the payment envisaged towards dissenting financial creditors is not less than the amount to be paid in accordance with sub-section (1) of Section 53 in the event of a liquidation of the CD. However, this computation has to take into account not just the component of the quantum of money but al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said resolution plan does not seek to take payment of the admitted amount due as on liquidation i.e. Rs. 70,31,00,000/- to the appellant nor does it seek to do so in priority as is mandated under the Code and the Regulations framed thereunder. With regard to the issue of incorrect double deduction of the VTL cash balance, reference may be had to the Distribution Mechanism that is annexed to the minutes of the 19th meeting of the CoC. Part (ii) of the Component II talks about the available cash balancing being subject to the vacation of lien by the Hon ble Delhi High Court. Thereafter, in the further explanation, it is stated that the Contingent Cash balance and Contingent Recoveries shall be distributed in the Distribution Ratio of 95:5 amongst the financial creditors towards their secured and unsecured admitted Financial debts. However, such a scenario is assuming all members of the CoC have assented to the Plan. In the case of any DFC, like the Appellant, it is stated that the distribution mechanism provides that such dissenting creditors would be paid in accordance with the proposal under the resolution plan(s) for the DFC. It is trite to note that the resolution plan under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction while approving the Resolution plan and the limited jurisdiction exercised by the Adjudicating Authority does not grant its right to modify the resolution plan approved by the CoC. Once the Adjudicating Authority determines that the resolution plan is in contravention to provisions of the Code then such Resolution Plan has to be sent back to CoC for reconsideration in terms of the judgment passed by the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited (Supra), the relevant para is reproduced herein below: 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. XIX. Further, it is categorically clear that the Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard the amount to be paid to the DFC is respected and preserved under the Resolution Plan. ii. The upfront payment due to any DFC shall be made prior to the upfront payment due to any Consenting/AFC. iii. The NCDs issued to any DFC shall be redeemed prior to the redemption of NCDs issued to the Consenting/AFC. c. Clause 3.4.5(b) of the resolution plan is set out herein below: (b) In lieu of and as consideration of the said assignment, transfer and conveyance of the part debt and the VTL debt, an amount of INR 200 Crore ( Upfront Payment ) shall be paid to the Financial Creditors towards assignment of Part Debt. This Upfront payment shall be deposited as per the timelines specified in Clause 7.2 in such bank account as may be specified by the Financial Creditors. The Upfront payment shall be subject to adjustments on account of payments to DFC. d. In view of the aforesaid, it is submitted that the Appellant s contention that, being a DFC, it is in a worse position than it would be in the event the CDs were liquidated under Section 53 of the Code is misplaced and without any merit. e. Without prejudice to the aforesaid, it is submitted that there was no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Application before the Adjudicating Authority. The Answering respondent craves leave to refer to and rely upon the Distribution mechanism approve by the CoC as and when produced. The decision on the distribution of proceeds, so long as the same is complaint with the Code, is within the domain of the CoC and ought not to be interfered with by the Adjudicating Authority in view of Section 30(4) of the Code. ii. It is therefore, submitted that all contentions of the Appellant on the basis that the Appellant or the other creditor have received a purportedly small amount as an outcome of the insolvency resolution process of the CDs are misconceived and against the letter and spirit of the Code and the Regulations framed thereunder. It is settled position of law that the Adjudicating Authority as also this Tribunal do not exercise jurisdiction over the commercial wisdom of the CoCs who are obligated to take a decision after consideration inter alia the viability and feasibility of the plan, the manner of distribution and the order of priority of payments within their commercial wisdom so long as their decisions are complaint with the applicable provisions of law. iii. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guarantee to secure the debt advanced to Gran Electronics Limited, and the Appellant heroin has filed a claim for the amount owed to the Appellant in respect of the said debts. Admittedly, the Appellant s claim to the extent of Rs. 200 Crore pertaining to the Corporate guarantee provided by R1 in favour of appellant to secure the aforesaid facility to Gran Electronics Limited is also admitted by the RP. The Appellant has filed a claim with the Respondent seeking to recover its dues from the present CIRP, it cannot at the same time contend that the mortgage given to secure the said debt should remain unaffected by the present proceedings. It is also stated that the said property belongs to the CD and ought to be part of the CIRP proceedings in any event, and the limited right that is available with the secured creditor is to vote against the resolution plan if it so chooses. Under Section 18(f) r/w Section 23(2) of the Code, the Answering Respondent is duty bound to take custody and control of all assets over which the CD has ownership rights. The said property at Shahajanpur being a property of the CD i.e. R-1, could not be left untouched or unaffected in the ongoing CIRP of R-1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, calculations and values arrived by the SBIcaps and communicated to the CoC for their commercial assessment cannot be made the basis of a viable challenge to the Resolution plan before this Tribunal. In any event, it is submitted that as stated above, the Appellant shall be paid its dues amounts on the basis of the liquidation value arrived by the valuation undertaken by the registered valuers at the time of distribution. It is therefore, submitted that the contentions of the appellant on valuation are without any merit and deserve to be dismissed. In view of the above there is no reason why the Appellant should not be satisfied as regards the valuation exercise undertaken by the Answering Respondent in respect of the CDs. i. It is also stated that there arises no question of sending the Resolution plan back to the CoC for reconsideration as the only aspect of the plan that was not allegedly not in line with the Jaypee decision was also addressed by the direction of the adjudicating Authority that upfront payment in cash shall be made to the DFCs. Since the primary grievance of the DFCs was that they should be paid in cash up front and in priority, and it has been addresse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OC meeting the distribution mechanism was presented to all the lenders. 13/11/2020 The process advisor SBI CAPS provided Appellant bank and other creditors the distribution mechanism presentation and the excel calculation (including the liquidation value calculation) for perusal of all the members. 11/12/2020 The e-voting results of 19th COC meeting were declared and the resolution plan dated 21st August 2020 and amended on 7th November 2020 r/w. e-mail clarification submitted by TSTL was approved and the distribution mechanism, as laid out in Annexure 2 of the 19th COC meeting was also approved. The Appellant bank dissented the resolution plan submitted by TSTL and also abstained from voting under distribution mechanism, making the Appellant a dissenting financial creditor 15/12/2020 Post approval of resolution plans by COC, the KP issued Letter of Intent dated 12.12.2020 to the successful Resolution Appellant TSTL on behalf of COC which was accepted unconditionally by on TSTL 05/01/2021 And 11/02/2021 20th meeting and 21st meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the financial creditor who do not vote in favour of the Resolution Plan in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with Sub Section 1 of Section 53 in the event of Liquidation. 2. The statutory duty cast upon the RP is to ensure that the amounts payable to the dissenting creditor shall be not less than the liquidation value. Thus, the said Section presupposes that the RP and the Creditors are aware about the liquidation value payable to the Financial Creditors in the event they dissent. The contention the said amounts will be calculated at the time of pay out shows that there is a complete noncompliance of Section 30(2)(b) that is to say that if the amounts were never calculated. 3. Section 30(4) provides that the COC may approve after considering its feasibility and viability including the manner of distribution proposed , which may take into account the order of priority amongst creditors as laid down in Sub Section (1) of Section 53 , including the priority and value of Security Interest of a secured Creditor , and such other requirements as may be specified by the Board. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be infact an integral part of the plan. 7. Clause 3.5 entirely deals with payments to be made to the DFCs and states that the same would be paid by way of NCDs. There is no whisper of cash . 8. Even otherwise by way of an affidavit the Respondents cannot justify the Impugned Order and supplement reasons. The impugned Order doesn t state that in view of clause 3.5.7, the said plan is not required to be sent back to the COC. D. Plan does not provide for upfront payment in priority to the Dissenting Financial creditor as provided in Section 30 of IBC code 2016 r/w IBBI regulation 38 1. It is submitted that to show compliance of priority payment to dissenting creditors, the plan is engineered in such a fashion so as to show that the NCDs available with the dissenting financial creditors would be redeemable one day prior to the assenting financial creditors. This is no priority at all and merely an eye wash. The same violates the scheme and the spirit of the code. 2. A priority is a situation where the money is being paid over and above other creditors. Akin to CIRP cost. Regulation 38 provides that operational creditors will have priority over financial cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued will be taken into consideration as equity shares are not being issued to the Dissenting Financial Creditors. At the relevant time, NCDs were proposed to be issued to the Dissenting Financial Creditors and the same was found to be in compliance with the Code and the CIRP Regulations as per the law as applicable at that time. [Ref para 4 III d) at pg. 11 of RP Reply] v. The decision of the Hon ble Supreme Court in the matter of Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd ( Jaypee ) was passed only on 24th March, 2021, which was after the filing of the Application for approval of the Resolution Plan ( Plan Approval Application ) before the National Company Law Tribunal, Mumbai ( Adjudicating Authority ) on 15th December, 2020, for approval of the Resolution Plan. Therefore, the RP could not have checked the Resolution Plan for compliance in accordance with Jaypee. In any event, as submitted hereinabove, the Resolution Plan by way of the aforesaid clauses, in particular Clause 3.5.7, clearly provides that in all circumstances and in any event, the payment proposed to be made and the manner of making the said payment to the Dissenting Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not received the said email from SBI Caps. ii. For valuation, the RP appointed two reputed valuers that are registered with IBBI namely RBSA Advisors and Rakesh Narula. Valuation reports were obtained from them on a confidential basis over email on 2nd September, 2020. [Ref para VI b), pg. 20-21 of RP Reply]. iii. The liquidation value and fair value in accordance with the valuation reports prepared by the registered valuers have been stated in Form H submitted along with the Plan Approval Application filed before the Adjudicating Authority for approval of the Resolution Plan. [Ref para VI b) iii), pg. 21 of RP Reply]. iv. Along with the Resolution Plans, the distribution mechanism was put to the vote and was placed before the Adjudicating Authority; the distribution mechanism stated that the Dissenting Financial Creditors will be paid the amount payable to them as per law. The distribution working as mentioned by the Appellant, which was arrived at by SBI Caps, was not put to vote before the CoC and neither did the RP confirm that the distribution working is final nor was the same placed before the Adjudicating Authority. [Ref para VI c), pg. 21-22 of RP Reply]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuming that it shall not receive the amount due and payable to it as per law. [Ref para 4 III d) at pg. 11 of RP Reply] x. The RP is not in a position to determine the exact amount payable to the Appellant prior to the date of actual payment in view of the eventualities that could arise. Therefore, the RP has provided an estimated number in Form H. The RP has not contravened the requirements of the Code and the CIRP Regulations. d. The Resolution Plan does not need to be sent back to the CoC for reconsideration i. The only aspect of the Resolution Plan that was allegedly not compliant with the Jaypee decision was also addressed by the direction of the Adjudicating Authority that upfront payment in cash shall be made to the Dissenting Financial Creditors. The primary grievance of the Dissenting Financial Creditors that were before the Adjudicating Authority has been addressed by the Impugned Order. ii. This Appellant never approached the Adjudicating Authority challenging the Resolution Plan, therefore, it cannot be permitted to raise these concerns at such a belated stage for the first time. [Ref para IV, pg. 14-16 of RP Reply]. 16. Submissions of the Respondent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits as follows: (i) The liquidation value mentioned as payable to DFC in Form H is an estimated amount only. (ii) The final figures payable to DFC are yet to be determined by the CoC. (iii) The stage for determination of final figures shall arises only at the time of payout . (iv) As per Clause 7.2 of the Resolution Plan, the time of payout to the DFC is on the T+44th day, with T being the date of approval of the Resolution Plan by the Hon ble Adjudicating Authority. (v) Even before such a stage could have been reached, the Appellant has filed the present Appeal. (vi) Hence, the present Appeal is premature. g. In addition to above and in any event it has been clarified by the Resolution Plan and the Form H that the amount payable to the DFC shall not be less than the liquidation value. Therefore, it is submitted that the present Appeal, apart from being premature, is misleading and without any basis. II. The Approval Order modifies the Resolution Plan a. It is submitted that the decision of the Hon ble Supreme Court in the case of Jaypee (supra) (passed on 24.03.2021) directing that DFCs should be paid in cash was not in existence on the date when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e haircut provided in the Resolution Plan are vast and this fact has not been looked into by the Hon ble Adjudicating Authority. b. In this regard, it is submitted that the commercial wisdom of CoC in approving the Resolution Plan is paramount and there can be no interference in the same unless the Resolution Plan contravenes a mandatory provision of the Code. In this regard, the Respondent No. 15 relies on the following decisions of the Hon ble Supreme Court: 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; Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd 2021 SCC Online SC 253, and; Kalpraj Dharamshi v. Kotak Investment Advisors Civil Appeal Nos. 2943-2944 of 2020]. 17. Company Appeal (AT) (Ins) No. 545 of 2021: A. Submissions of the Appellant- Electrolux Home Products INC. I. The Ld. Sr. Counsel for the Appellant has submitted that it is a market leader in the business of manufacturing and distributing electrical appliances including refrigerators, dishwashers, washing machines, vacuum cleaner, cookers, which, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted June 30, 2006. As a result, thereof, all the assets and liabilities of EKL, including the TLA, stood transferred to the CD. The CD, therefore, became the licensee of the said Trademark. IV. The TLA dealt with the manner in which and also set out in extenso the terms and conditions on which the Licensee would be entitled to use the said Trademark. By the TLA, the Appellant granted the licensee an exclusive right and license to use the Trademark on or in connection with the manufacture, packaging, sale, marketing, distribution and services of the Trademark Products (as described below) in India, Bangladesh, Bhutan, Nepal, Pakistan and Sri Lanka ( Sales Area ). Trademark Products were defined to mean products of different models and sizes in the categories of refrigerators, freezers, washing machines, microwaves, dishwashers, dish sterilizers, dish dryers, microwave ovens, air conditioners, cooker hoods and hobs (all for consumer use) whose specifications, quality, packaging, advertising and promotional literature conformed to the standards imposed by the TLA in respect of which the licensee was entitled to use the Trademark. Some of the key terms of the TLA are set out below, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agreement, (i) Licensee shall have no right, title, or interest in or to the Trademark, and (ii) upon and after the termination of this Agreement, all rights granted to Licensee hereunder, together with any interest in and to the Trademark that Licensee may acquire, shall forthwith and without further act or instrument be assigned to and automatically revert to the Licensor ... Termination of the TLA: V. The subject petition seeking to admit the Corporate Debtor into CIRP was filed on January 1, 2018. On June 5, 2018, the Appellant addressed a letter ( June Letter ) to the Corporate Debtor, recording that upon the Petition being admitted, the powers of the Corporate Debtor's Board of Directors would vest in the interim resolution professional. This would mean that the Dhoot family would no longer be in control of the Corporate Debtor. The TLA specified that the Appellant was entitled to terminate the TLA if the Corporate Debtor underwent any event that resulted in the Dhoot family no longer being in control. Accordingly, in terms of its rights under Clause 16.2(d)( iii) of the TLA, the Appellant stated that the TLA would stand terminated from the date on which the Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intment of Mr. Jain as the IRP, the Appellant addressed an email dated June 8, 2018 to the IRP, requiring the IRP to confirm receipt of the June Letter. The IRP replied by way of an email dated June 9, 2018, confirmed receipt of the June Letter. Again, on September, 21, 2018, the Appellant addressed a letter to R-1 (September Letter), calling the Trademark products, and to provide an exhaustive schedule of all inventory of trademark products currently in the Corporate Debtor s possession. On October, 18, 2018, the Appellant received a letter dated October 15, 2018 (RP I Letter) and a letter dated October 18, 2018 ( RP II Letter ), addressed on behalf of the RP. The aforesaid letters belatedly questioned/ challenged the termination of the TLA. By the RP I Letter: a. The Appellant's termination of the TLA was invalid; b. The termination of contracts pursuant to initiation of insolvency proceedings would frustrate the objectives of the Code; and c. The Corporate Debtor was entitled to continue to operate as per the TLA. VII. It is also stated that On October 19, 2018, the Appellant replied to the RP I Letter and RP II Letter ( October Letter ). In this October Letter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s wanton disregard of contractual obligations, the Appellant was constrained to file MA 527/2019 before the Adjudicating Authority on February 5, 2019, seeking inter alia a declaration that the termination of the TLA was valid and directions that the RP be prohibited from using the Trademark in any manner. X. It is also stated that the judgment of the Hon'ble Supreme Court in Gujarat Urja (supra), the Adjudicating Authority had jurisdiction to and was required to adjudicate questions in MA 527/2019 as they related directly to the CIRP of the Corporate Debtor, since the termination of the TLA was inter alia on grounds of commencement of CIRP proceedings against the Corporate Debtor. The TLA entitled the Appellant to terminate the TLA in case Videocon files for bankruptcy, goes into liquidation other than a voluntary liquidation for the purpose of a bonafide reorganisation or any winding up, restructuring or any other proceedings to a similar effect have been filed and admitted against [Videocon] and has not been withdrawn, dismissed or disposed of within 90 days from the date of such admission . XI. It is also stated that Respondent No. 1 had placed no material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive parties. Instead, in paragraph 11, the Adjudicating Authority proceeds to dispose of MA 527/2019 in a totally unreasoned, arbitrary and non-speaking manner which fails to even give a glimpse of what weighed with the Adjudicating Authority or what formed the basis of its decision. It is respectfully submitted that the Impugned Order is ex facie unsustainable, perverse and deserves to be set aside on this ground alone. That the Impugned Order dealing with precious civil rights of parties is required to be a speaking and reasoned order. If parties' rights are being affected, the Adjudicating Authority reasons for the same are required to be recorded. Despite the Appellant canvassing extensive submissions and arguments on why the termination of the TLA was valid, and why the Corporate Debtor and/or entities claiming under it could not utilize the Trademark, the Adjudicating Authority passed the Impugned Order granting Respondent No. 2 the right to use the Trademark for one year. It recorded no reasons for its arbitrary order on this front. On this ground alone, the Impugned Order requires to be set aside. XIV. That the Impugned Order is arbitrary and has been passed without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ipso facto clauses are contractual provisions which allow a party ( terminating party ) to terminate the contract with its counterparty ( debtor ) due to the occurrence of an 'event of default'. In the context of insolvency law, in some of these ipso facto clauses, the 'event of default' include applying for insolvency, commencement of insolvency proceedings, appointment of insolvency representative, et al. The United Nations Commission on International Trade Law released its Legislative Guide on Insolvency Law in 2004. This guide defines ipso facto clauses in the following terms: 114. Many contracts include a clause that defines events of default giving the counterparty an unconditional right, for example, of termination or acceleration of the contract (sometimes referred to as ipso facto clauses). These events of default commonly include the making of an application for commencement, or commencement, of insolvency proceedings; the appointment of an insolvency representative; the fact that the debtor satisfies the criteria for commencement of insolvency proceedings; and even indications that the debtor is in a weakened financial position ... The validit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al rights of the counter party to the contract . 132 However, as is evident, this recommendation was never directly embodied legislatively since the current Code contains no clear-cut provision which invalidates ipso facto clauses. In fact, the issue of the invalidation of ipso facto clauses was noted in a December 2018 report titled 'Insolvency and Bankruptcy Code: The journey so far and the road ahead' issued by Vidhi Centre for Legal Policy. The report notes that the Code does not per se prohibited the operation of ipso facto clauses during insolvency proceedings. However, Section 14 provides for a limited exception prohibiting the termination, suspension or interruption of specified essential goods or services (i.e. water, electricity, telecommunication services and information technology services to the extent they are not direct inputs to the output produced or supplied by the corporate debtor), and also provides relief to the corporate debtor from the recovery of any property by an owner or lessor during the moratorium . As a solution, the report recommends a conditional stay on the operation of ipso facto clauses, beginning from the insolvency commencement dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them even during the CIRP period. This could be attempted in two ways: one, by relying on ipso facto clauses, by virtue of which these grants may be terminated on the advent of insolvency proceedings themselves, and second, by initiating termination on account of non-payment of dues. 8.4. The Committee discussed that by and large, the grants that the corporate debtor enjoys from the substratum of its business. Without these, the business of the corporate debtor would lose its value and it would not be possible to keep the corporate debtor running as a going concern during the CIRP period, or to resolve the corporate debtor as a going concern. Consequently, their termination during the CIRP by relying on ipso facto clauses or on nonpayment of dues would be contrary to the purpose of introducing the provision for moratorium itself. Thus, the Committee concluded that the legislative intent behind introducing the provision for moratorium was to bar such termination. 8.5. In this regard, the Committee noted that depending on the nature of rights conferred by them, these grants may constitute the property of the corporate debtor. Section 3(27) of the Code provides an inclusive de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es enormous significance (or the successful completion of the CIRP. The termination of the PPA will have the consequence of cutting the legs out from under the CIRP. K.2 Validity of the termination of PPA 153 As discussed in Section J.3 of this judgement, the broader question of the validity of ipso facto clauses has been the subject matter of sustained legislative intervention in many jurisdictions. This is an intricate policy determination, for it raises a series of questions about striking the appropriate balance between contractual freedom on the one hand and corporate rescue on the other. We are cognizant that any rule that we might craft, howsoever narrow, could have a series of unintended second order effects, in terms of opening the floodgates for intervention from the NCLT that might impinge upon contractual freedom of the terminating party. Further, the comparative experience also teaches us that, given that the invalidation of ipso facto clauses can unsettle the interests that contractual relationships are founded upon, some jurisdictions that have invalidated such clauses have done so in a cautious, prospective fashion. This ensures that while the policy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which was adopted in the SICA. Yet, no concrete position has been adopted in relation to the termination of ipso facto clauses by the legislature under the IBC. In the absence of an express prohibition by the legislature, it can be argued that there is no general embargo on the operation of such clauses if they are part of a valid contract under the Contract Act. 155 At the same time, we cannot lose sight of the fact that this Court is apprised with a novel situation where the 'going concern' status of a corporate debtor will be negated by a termination of its sole contract, on the basis of an ipso facto clause. It is pertinent to note that the IBC has been in effect from 5 August 2016, and has also been amended multiple times. Hence, if the 'going concern' status of corporate debtors was being affected on a regular basis due to ipso facto clauses (which are in vogue even in the present contracts similar to the current PPA), then the legislature may, if it considered necessary, have proceeded to legislate on an explicit position with regard to the operation of ipso facto clauses. However, this Court in the present case is not required to resolve the broad ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given a harmonious interpretation which comports with the intention of the Legislature. The commentary provides: The rule of strict construction, however, whenever invoked, comes attended with qualifications and other rules no less important, and it is by the light which each contributes that the meaning must be determined. Among them is the rule that that sense of the words is to be adopted which best harmonises with the context and promotes in the fullest manner the policy and object of the legislature. The paramount object, in construing penal as well as other statutes, is to ascertain the legislative intent and the rule of strict construction is not violated by permitting the words to have their full meaning, or the more extensive of two meanings, when best effectuating the intention. They are indeed frequently taken in the widest sense, sometimes even in a sense more wide than etymologically belongs or is popularly attached to them, in order to carry out effectually the legislative intent, or, to use Sir Edward Cole's words, to suppress the mischief and advance the remedy. 165 Given that the terms used in Section 60(5)(c) are of wide import, as recognized in a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant, since allowing it to terminate the PPA would certainly result in the corporate death of the Corporate Debtor due to the PPA being its sole contract: and (iii) We leave open the broader question of the validity/invalidity of ipso facto clauses in contracts for legislative intervention. Consequently, for the above reasons we find no merit in this appeal and it is accordingly dismissed . ... XV. Analysed in the above framework, it becomes clear that Impugned Order, so far as it relates to MA 527/2019, requires to be set aside. There was no pleading let alone material placed on record by Respondent No. l, nor does the Impugned Order note, that the Trademark which was licensed to Corporate Debtor is the sheet anchor of the Corporate Debtor or that termination of the license would cut the legs out from under the CIRP of the Corporate Debtor - which are crucial tests framed by the Hon'ble Supreme Court in Gujarat Urja (supra). In fact it is clear from the Respondent No.1's admission that the Trademark has not been used since 2018. That the Respondents clearly failed to make out any case to satisfy the test laid down by the Hon'ble Supreme Court in Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period . The TLA does not fall within the categories of licenses that may not be terminated as set out in the explanation extracted above. There is therefore no basis in the law to suggest that the termination of the TLA by the Appellant is impermissible in law. Notwithstanding the aforesaid, assuming (without admitting) that the TLA is considered to fall in the category of 'essential good or services' and could not have been terminated during the moratorium, then under the provisions of Section 14 of the IBC read with Regulation 13 of the IBBI (Insolvency Regulation Process for Corporate Persons) Regulation, 2016, any losses owed to the Appellant during the continued refusal to recognize the termination of the TLA would be payable as Insolvency Resolution Process Costs, which the resolution plan admittedly fails to do. Further any such moratorium on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re would be no question of continuing for one year. However, if termination was unlawful- there no requirement to restrict it to one year. The transitional arrangement has no basis in law or contract. V. It was also stated that the Resolution Plan could only provide for subsisting contracts for the purpose of carrying on the business of the Corporate Debtor and which were subsisting or having effect immediately before the Impugned Order, be deemed to continue and to be valid and subsisting. The Resolution Plan is binding on all stakeholders including the Appellant and the TLA is deemed to be valid and subsisting. The Appellant is not aware about the contents of the Resolution Plan. Notwithstanding the same, the aforesaid argument is misconceived primarily for the reason that the TLA was already terminated by the Appellant on June 5, 2018, and therefore the Resolution Plan could not have provided for validity and subsistence of a contract which was already terminated. (Appellant s Affidavit in Rejoinder to the Affidavit in Reply of Respondent No. 2, paras 7-8). Additionally, it is settled law that a resolution plan cannot operate to unilaterally modify contractual rights of an en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sheet anchor of the Corporate Debtor and that termination would have the consequence of cutting the legs out from under the CIRP (para 152). B. Submissions of the Respondent No.1 I. It was stated by the Ld. Sr. Counsel for the RP that the Appellant ( Electrolux ), a company incorporated in US, is the registered proprietor of the trademark Kelvinator ( Trademark ) which was licensed to the Corporate Debtor via a Trademark License Agreement dated 7th July, 2005 ( TLA ). The TLA was terminated by Electrolux vide a letter dated 1 st September, 2018 ( Termination Letter ) on account of the initiation of insolvency and change of control of the Corporate Debtor from the Promoters (defined as Dhoot Family in the TLA) to the Resolution Professional ( RP ). The RP objected to the said termination, specifically on the grounds of moratorium under Section 14 of the Code. Electrolux preferred an application (M.A. 527/ 2019) before the Adjudicating Authority seeking a permanent injunction against the Respondent from manufacturing the goods under the Trademark and upholding the termination of the TLA. II. It is Electrolux case that the Adjudicating Authority Order is in viola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets of the Corporate Debtor termination of which is specifically prohibited under Section 14 of the Code. It is submitted that the judgement only deals with contractual arrangements which are otherwise not covered within Section 14 of the Code. [Para 20(l) and 20(m), RP s Reply]. The termination of the TLA by Electrolux is contrary to Section 14(1) of Code which specifically prohibits alienation or disposing of the Corporate Debtor s assets or any legal right or beneficial interest in such asset. As the purpose of the moratorium includes preserving the Corporate Debtor's assets during the CIRP, maximising their value and facilitating orderly completion of the CIR process, the termination of license or any such adverse action to the detriment of the Corporate Debtor is in direct contradiction with the purpose and intent of the moratorium under Section 14 of the Code. [Para 14 -16, RP s Reply]. IV. It is submitted that the TLA adds value to the goods produced by the Corporate Debtor and in effect is of value for the Corporate Debtor. The RP has carried out his duties effectively and protected the assets of the Corporate Debtor in the interest of maximisation of value of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te on which the application for CIRP is admitted by the Adjudicating Authority . Hence, the TLA was subsisting on the date of the order of the Adjudicating Authority admitting the Section 7 application and also immediately before it. Therefore, as per Clause 11.3 of the approved Resolution Plan, the TLA continues to be valid and subsisting. IV. It is also submitted that the Appellant has allegedly terminate the TLA vide its letter dated 05.06.2018 by invoking clause 16.2(d)(iii) of the TLA. The Appellant has thereafter issued a Letter dated 19.10.2018 (appearing at page No.240 of the Appeal Paper Book), whereby, as an afterthought, the Appellant has also included Clause 16.2(a) of the TLA as a ground for termination. It is submitted that the events of termination mentioned in Clause 16.2(a) and 16.2(d)(iii) are inconsistent with the provisions of Section 14 of the Code, especially clause (d) of subsection (1) thereof, which prohibits the recovery of any property (in this case the trademark) by an owner (in this case the Appellant) where such property is occupied by or in the possession of the CD (in this case the R-1). V. In view of the above, it is submitted that Clause 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntor shareholder and ex-managing Director/Chairman of Videocon Industries Limited and is interested entity of the CD and its stakeholders. What has been stated by the Appellant is that all assets owned by Videocon Group, particularly, foreign oil and gas assets are not included in the Information Memorandum as also no valuation thereof has been considered while the claim of lenders of foreign oil and gas assets of Rs. 23,120.90 Crore being considered as claimed upon CD. II. It was also stated by Ld. Sr. Counsel, the reason for considering consolidated group insolvency resolution with main thrust on foreign oil and gas assets not to be treated separately so that all the creditors should get maximum value. The RP and CoC have committed material irregularity of high magnitude in ignoring to include foreign oil and gas assets of VIL as assets of VIL. They have also raised the issue that just by paying only Rs. 262 Crore (out of which cash balance available with CD is Rs. 200 Crore) approximately Rs. 2700 Crore through NCD carrying 6.65% p.a. payable annual interest rate, the Resolution Applicant will get possession of all 13 CDs to run these units against the property for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusal of the minutes of meeting of MD and CEO of SBLC Lenders on 13.06.2018 (appearing at page no.84-85 of the rejoinder to R1) indicated that SBI deliberately transferred the shares of VIL in VOVL and VHHL in favour of SBICAP Trustee Company Limited so as to sequester the foreign oil and gas assets from the CIRP of VIL. Valuation of standalone foreign oil and gas assets was at 4.29 billion USD in 2017, the value was projected at 5.08 Billion USD in 2019, 5.61 Billion USD in 2020 and 7.02 Billion USD in 2023 (appearing at page no.101 of rejoinder to the reply of R1). Therefore, it is evident that if the said assets would have been included in the CIRP of the CDs then the same would have resulted in maximization of wealth of the CDs. However, SBI, in order to have an edge over the other creditors and to have benefit of such valuable foreign oil and gas assets, in collusion with the RP, made sure that the said foreign oil and gas assets are excluded from this CIRP. All the assets and liabilities of VHHL, VINI, VEBL and other subsidiaries of VOVL have been specifically included in the IM VOVL. However, in VIL s IM and the consequent resolution plan, the assets of its subsidiaries i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the SBI is blowing hot and cold under the same breath as at one stage i.e. for the purpose of consolidation, SBI requested for consolidation order in order to have common pool of assets for maximization of value of CDs whereas on the other hand SBI invited interest for sale of foreign oil and gas assets and is contesting upon inclusion of same is common pool of assets. The RP failed to examine whether the resolution plan is in compliance of section 30(2) of the Code and a noncomplaint resolution plan was placed by the RP before the CoC for their deliberation/approval. The RP ought to have taken active steps to have the appeals dealing with inclusion of foreign oil and gas assets pending before this Appellate Tribunal adjudicating at the earliest. VII. It is also stated that it needs to be considered if Resolution Professional and their appointed agencies were concerned only with drawing their remuneration to the extent of Rs. 1.5 crore per month, without discharging the duties to maintain the Corporate Debtors as going concern and prevent eroding value of assets of Corporate Debtors? It needs to be considered as to what are the reasons of arriving at such low liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12A proposal on the basis that the settlement proposal is superior to the approved resolution plan. It is submitted that the Appellant has failed to demonstrate any provision of the Code and /or the Regulations thereunder, which would entitle the Appellant to seek acceptance of his 12A proposal by the CoC as a matter of right. As recognized by the Hon ble Supreme Court in Swiss Ribbions Pvt. Ltd Ors. Vs. Union of India Ors. AIR 2019 SC 739 (para 38, 121), the requirement of seeking approval for majority of the CoC implies that those proposing the settlement cannot claim it as a matter of right. Since Section 12A proposal is a settlement/withdrawal mechanism, the Appellant cannot seek re-consideration of the proposal on the same lines as a resolution plan. The RP has acted in accordance with the Code and had no occasion to treat the foreign oil and gas assets as part of VIL s assets in view of the stay order. At the outset, it is important to highlight that the RP only acted within the ambit of duties/powers conferred upon it by the Code and its CIRP Regulations. Pertinently, under Section 18(f) of the Code r/w Section 23(2) of the code, a RP is under the mandate to take cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant seeking issuance of fresh information memorandum and call for fresh EOI/Resolution Plan for all assets of Videocon group including all foreign oil and gas assets of Videocon Group is subject matter of CA(AT) (Ins) No. 299, 467, 639, 640 of 2020, pending before this Appellate Tribunal, and thus cannot be entertained in the present appeal. Additionally, the allegation that the RP inflated the liabilities of the CD is misconceived. The RP has admitted those claims of other entities creditors filed with him and to such extent that they relate to security interests created in favour of these creditors by the CDs being crosscollateralized and corporate guarantee claims in accordance with the Code and Regulations thereunder. The Appellant has provided no substantiation to his bald allegations, the Respondent reserves its rights and would be happy to provide a detailed explanation for each admitted claim if deemed necessary by this Tribunal. IV. It is also stated that the Appellant s contention that the RP has failed to examine whether the Resolution Plan is compliant or not is totally devoid of merit and untenable both in law and facts. It is submitted that the resolution plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its statutory duty under Section 25(2)(j) of the Code R/w Regulation 35A of the CIRP Regulations. The Appellant s allegations disputing its evidentiary value are baseless and extraneous to the present appeal. B. Submissions of the Committee Creditors of Consolidated Videocon Group of Companies:- I. It is stated by the Ld. SG that the instant appeal has filed by the Appellant is a part of a long-drawn strategy of the Appellant herein to disrupt the successful and smooth functioning of the CIR Process of Consolidated Corporate Debtors. It is submitted that Videocon Industries Limited and Videocon Telecommunications Limited were 2 (two) of the largest accounts that were classified as non-performing assets by banks on account of the defaults and in respect of whom, the Reserve Bank of India ( RBI ) had provided specific instructions for initiating insolvency proceedings pursuant to the provisions of Section 35AA of the Banking Regulation Act, 1949, as amended. It is submitted that RBI had sent a letter to SBI in its capacity as Lead Bank ( RBI Letter ), directing to provide the companies classified as Non-performing assets as per the data maintained by the Central Reposito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, is without any basis and is non-maintainable under the Code on account of the initiation of personal insolvency proceedings against him and since it is preferred merely to scuttle the CIR Process of the Consolidated Corporate Debtor and misuse the same to create hindrances in the personal insolvency proceedings before the Hon ble Adjudicating Authority. The Respondent No. 2 respectfully submits that the instant Appeal contains several false, unfounded, bald, vague and inaccurate statements/ averments which are in the form of allegations against the lenders. Such allegations are totally devoid of any merit. III. It is submitted that the present Appeal deserves to be dismissed in limine and ought to be dismissed on, inter alia, the following grounds: a. The Appellant lacks the locus standi to file the present Appeal as the Appellant cannot be considered to be an aggrieved person under Section 61 of the Code. The Appellant after having made all attempts to frustrate the successful resolution of Consolidated Corporate Debtors is merely attempting to further derail and disrupt the CIR Process of the Consolidated Corporate Debtors in gross abuse of the process and in com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solidated Corporate Debtors thereby jeopardizing the interest of all stakeholders and defeating the very objects of the Code. The Appellant has filed numerous litigations in a gross abuse of the process with the sole intention to disrupt the CIR Process and frustrate smooth conclusion of the CIR Process. It is a matter of record that the Appellant s acts of commission and omission while in control of the Consolidated Corporate Debtors are being investigated by several investigating agencies. Furthermore, Appellant s instant challenge to the Impugned Order is unmerited inasmuch it is squarely covered by this Hon ble Tribunal judgment in Mr. Vishal Vijay Kalantri vs. Mr. Shailen Shah (Resolution Professional of Dighi Port Limited) Ors., CA-AT (Ins) No. 466 of 2020 ( Vijay Kalantri ). In Vijay Kalantri, this Hon ble Tribunal was faced with similar fact situation as there as well the 12A settlement proposal of the promoter was rejected by the CoC with 99.68% vote while the resolution plan of one resolution applicant was approved by 99.68% vote. While dismissing the promoter s challenge to the approval of the resolution plan and rejection of its 12A proposal, this Tribunal observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s seeking similar reliefs, bearing MA No. 2385 of 2019 and MA No. 2620 of 2019, for inclusion of the foreign oil gas assets held by the foreign incorporated subsidiaries of VIL in the CIR Process of VIL. It is pertinent to note that even during the consolidation proceedings leading upto the Order dated 8 August 2019, the Appellant did not raise any averment about inclusion of foreign oil and gas assets in the CIRP of Consolidated Corporate Debtors. These MAs came to be filed only after almost a year after initiation of CIR Process against VIL and 12 group companies, with the sole intention to delay and derail the CIRP of Consolidated Corporate Debtors. The said MAs were contested by the lenders, inter alia, on the ground of it being ultra vires the provisions of the Code inasmuch as the Code has no extra-territorial application over such foreign incorporated subsidiaries and the assets held in subsidiaries of Videocon Industries Limited. Despite this, the Adjudicating Authority vide 12.02.2020 Adjudicating Authority Order (defined below) directed inclusion of the foreign oil and gas assets in the CIR Process of VIL. However, the said 12.02.2020 Adjudicating Authority Order was ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad of clearing off the dues owed to the financial creditors, have employed all possible tactics to delay and frustrate the judicial process, including but not limited to: A. Appellant and other related promoters, namely Mr. RN Dhoot and Mr. PN Dhoot, have been constantly delaying and frustrating the DRT recovery proceedings initiated against them by, inter alia, evading service; B. Similarly, before the Adjudicating Authority in the personal insolvency proceedings, Mr. RN Dhoot attempted to evade service of the insolvency petition. Three separate personal insolvency proceedings were filed against three personal guarantors namely Mr. RN Dhoot, Mr. VN Dhoot and Mr. PN Dhoot before Adjudicating Authority Mumbai, which were pending before different benches Inspite of there being no correlation between the three personal insolvency proceedings, with the sole intention to cause further delay, Mr. RN Dhoot had also filed a transfer petition seeking transfer of all the personal insolvency applications before a single bench of the Mumbai Bench of the Adjudicating Authority that has been dealing with the CIR Process of Consolidated Corporate Debtors, on baseless and untenable grounds. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the Writ Petition, VOVL did not raise any contention that the Oil Gas Assets belong to VIL and hence should be resolved under the ongoing CIR Process of VIL (which had commenced on 6th June 2018) at the time of filing the Writ Petition. However, in July 2019, viz., after a lapse of almost 10 months from the date of filing of the Writ Petition, the Appellant filed MA 2385 of 2019 before the Adjudicating Authority praying that the foreign oil gas assets belong to VIL. VIII. The Resolution Professional placed 2 compliant resolution plans before the Respondent No. 2 for approval, out of which the Respondent No. 2 approved the resolution plan of Respondent No. 3 with 95.09% voting share. It is submitted that extensive discussions and deliberations were held with all resolution applicants. IX. It is submitted that the Appellant cannot claim consideration of its 12A proposal as a matter of right. In fact, the very person who is directly responsible for the present condition of the Consolidated Corporate Debtors and the extensive losses being suffered by all the stakeholders of the Consolidated Corporate Debtors does not have any vested or fundamental right for this Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of 98.14% voting share. It is respectfully submitted that except one financial creditor (namely ABG Shipyard Limited, which itself is a company undergoing liquidation currently), all the financial creditors who cast their vote rejected the Appellant s Withdrawal Proposal (including the dissenting financial creditors namely Bank of Maharashtra, IFCI Limited and SIDBI who have filed separate appeals against the Impugned Order). The Appellant is belatedly trying to challenge the rejection of his Appellant s Withdrawal Proposal with an ulterior motive only known to him. XII. The Appellant has incorrectly, and in any case belatedly, sought to challenge the rejection of its 12A proposal by the CoC of the Consolidated Corporate Debtors vide the instant Appeal. It is submitted that the Appellant in the instant Appeal has sought to indirectly bring into life a dead issue inasmuch as the Appellant s Withdrawal Proposal was rejected way back on 11.12.2020, while the present Appeal is filed on 31.07.2021, i.e., after lapse of more than 7 months. It is respectfully submitted that the background circumstances under which the Appeal has been filed by the Appellant cannot be lost sight of. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Letter dated December 18, 2018 and requested SBI to initiate the process of assessing the valuation of Oil Gas Assets and undertake monetisation, and VOVL is ready and willing to do necessary things in this regard. Thereafter, Deed of Undertaking dated January 9, 2019 from VOVL, VHHL, VEBL and VINI was also executed in SBI s favour in relation to mutual decision taken to initiate process of valuation and monetisation of certain Oil Gas Assets. XV. It is submitted that the 12.02.2020 Adjudicating Authority Order came to be passed on the MA 2385 filed by the Appellant more than a year after the initiation of the CIR Process against Consolidated Corporate Debtors. Appellant mischievously filed the MA 2385 seeking inclusion of foreign oil and gas assets held by the foreign incorporated subsidiaries of Videocon Group. The said application was vehemently opposed by SBI for the CoC before the Adjudicating Authority. However, despite the strong objections to the inclusion of these assets, Adjudicating Authority vide Order dated 12.02.2020 directed the Resolution Professional of VIL to: a. to consider and treat all assets, properties, rights, claims, benefits of VOVL, VHHL, VEBL a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets but burdened with liability, Which may cause disadvantage if segregated. But after consolidation all the liabilities pooled together can be satisfied up to large extent against the value of common pooled assets, which are otherwise in control of a single entity. In this group Licenses, Good-will, Permits, Trademarks etc. are valuable but scattered all over the group entities. One more valuable asset is Oil Gas field acquired through joint venture and duly taken as a valuable property by the banks while granting loan. So all are to be consolidate which shall create a high value cumulative asset, going attract an equally high value Resolution Plan. Singly it is a far sight. Therefore apart from all other reasons inter-alia, the existence of Reeva oil-field in the common pool of assets is a good reason for propounding Consolidation . XVIII. It is also stated that the Appellant has no locus standi to espouse issues purportedly at the behest of creditors of the Consolidated Corporate Debtors. The proceedings initiated against the Appellant and the personal guarantors are bona fide and in accordance with applicable laws. C. Submissions of the Respondent No.3/Successfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution plan. In this regard it would not be out of place to mention that not even a single OC has challenged the resolution plan. Hence, the present appeal alleging that the resolution plan discriminates OCs is exfacie meritless. IV. Similarly, in so far as the allegations of the Appellant regarding the haricuts provided in the resolution plan to the OCs and the FCs is concerned, it is submitted that: a. The Appellant has no locus to make such averment; b. The commercial wisdom of CoC in accepting a particular haricut is not amenable to judicial review as settled by the Hon ble Supreme Corut in a catena of decisions, and; c. The Appellant never raised its objection on haircut provided in the Resolution plan before the Adjudicating Authority. V. It is also submitted that the Appellant has never filed any application before the Adjudicating Authority opposing the approval of the Resolution plan of R-3 on the ground that the consolidated CIRPs ought to have included the foreign oil and gas assets. Hence, without prejudice to the below, it is submitted that the plea of Appellant on inclusion of foreign oil and gas assets is only an afterthought action and is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign oil and gas assets of the four entities. VII. It is also submitted that the Appellant is merely raising the aforesaid issue to sabotage and derail the CIRP upon approval of the resolution plan. Hence, the appellant s averment that foreign assets of four entities ought to have been considered in the consolidated CIRPs is plainly meritless and liable to be dismissed. VIII. The Section 12A proposal of the Appellant was placed for voting during the 19th meeting of the CoC 11.11.2020 along with the Resolution plan of the Respondent No.3 and the one other resolution plan filed by the V-shape investment management limited. Upon consideration, the CoC has rejected the section 12A proposal. Admittedly the above decision of CoC has not been impugned by the Appellant before the adjudicating Authority, a fact which has been suppressed in the present appeal. Hence, the appellant has no standing and case of action to seek the prayer for reconsideration of the 12A proposal by CoC when, in fact, such prayer was never made before the Adjudicating Authority. This apart, it is settled law that the decision of CoC to approve or reject a Section 12A proposal is part of its commercial wisdo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services Limited Vs. Vishal Ghisulal Jain, Resolution Professional, SK Wheels Pvt. Ltd. has held vide para 27 that NCLT does not have any residuary jurisdiction to entertain the contractual dispute and the same is stated below: Para 27. - It is evident that the appellant had time and again informed the Corporate Debtor that its services were deficient, and it was falling foul of its contractual obligations. There is nothing to indicate that the termination of the Facilities Agreement was motivated by the insolvency of the Corporate Debtor. The trajectory of events makes it clear that the alleged breaches noted in the termination notice dated 10 June 2019 were not a smokescreen to terminate the agreement because of the insolvency of the Corporate Debtor. Thus, we are of the view that the NCLT does not have any residuary jurisdiction to entertain the present contractual dispute which has arisen dehors the insolvency of the Corporate Debtor. In the absence of jurisdiction over the dispute, the NCLT could not have imposed an ad-interim stay on the termination notice. The NCLAT has incorrectly upheld the interim order of the NCLT. All this reflects that the Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings. The RBI has sent a letter to SBI in its capacity as lead bank to resolve their debts outside the scheme of the Code till December, 13,2017 failing with insolvency proceedings under the Code are to be initiated against the companies before 31.12.2017. As a result of non-resolving the continuing default, the CIRP petition was filed on 01.01.2018 against VIL and VTL ; they are blaming the poor management of the appellant leading to such situation who is obstructing to frustrate and derail the CIRP and thwart all attempts of a Successful Resolution of a consolidated CD. It has also been stated by the CoCs that it is a matter of record the applicants act of commission and omission while in control of the consolidated CDs are being investigated by several investigating agencies and the proposal under Section 12A of the Code was already rejected by the CoCs. The Appellants are challenging the impugned order just for reviving its Section 12A (of IBC) proposal. It has also been stated by them that it is the commercial wisdom of the CoCs to manage the CIRP the way they think fit and proper. The Appellant s Section 12A proposal was rejected by CoCs by a majority of 98.14% voting share. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while he himself has given estimated figure and has undertaken to provide correct figure at a later date. This does not seem to be appealing. 25. It is also revealed that the amounts to be paid to the banks will be determined at the time of payout in itself, is misconceived. Simply stating everywhere that it shall not be less than the amount to be paid to such creditors in accordance with Section 53 of the Code in the event of liquidation is just washing off his hands. It is also a fact that the direction by the Adjudicating Authority to the SRA to pay the DFC by cash instead of NCD amounts to modification of the Resolution Plan. This is a domain of the CoC not Adjudicating Authority. Resolution Plan does not provide for upfront payment in priority to the DFC as provided in Section 30 of the Code R/w IBBI ( INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS ) Regulations 38. Para 3.5 of the resolution plan proposes that NCD will be issued to the DFC redeemable after a significant period of time around five years which does not qualify as payment in terms of Section 30 (2)(b) of the Code. Perception of breach of confidentiality in relation to liquidation value is not rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h to give due consideration of observations in the impugned order and the stay order passed by this Tribunal on 19.07.2021. The CoC, majority of which are public sector banks and financial institutions dealing with public money is acting as the custodian of public trust and discharging statutory role. The CoC is vested with a duty of trust and care. The CoC power is not without responsibility and even Hon ble Apex Court has made the CoCs decision on commercial matters as non-justiciable. Keeping in view these factors in mind, the public sector banks and financial institutions etc., constituting approx.95% of the CoC (out of 95.09% voted in favour) have resolved to request this Tribunal to remand the matter back to the CoC for its reconsideration through an affidavit. We agree that the CoC, if it has power to approve the plan, has also power to reconsider and review its own decisions on Resolution Plan. Power to approve, no doubt, carries with it power to reconsider. As stated supra, the Board of Directors of the Companies who approves the proposal also at a later date review and even annulles the approvals in the course of the implementations, if observed and pointed out by the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral meeting of the Company or in the Extra ordinary general meeting of the Company. Based on Board approved resolution as per the requirement of the Companies Act, whether it is of Companies Act, 1956 or Companies Act, 2013. Certain resolutions require approval of the shareholders as per provisions of the Companies Act. These shareholders based on the wisdom approves a particular proposal or disapproves a particular proposal at a particular point of time. They also can change their approval based on input provided at a later stage by a majority votes or otherwise or may be if it is proposed by requisite majority as per provisions of the Companies Act by convening Extraordinary General Meeting or placing it before the Annual General Meeting. 35. We all talk of going concern concepts under the Code and this concept is meant for giving a life to the company under a resolution. With the initiation of CIRP, the management changes instead of Board of Directors, it is the CoC who takes over the management of the Company. The role of RP has already been prescribed under the Code and the Regulations and for specific actions where the approval of the management is required, he has to go t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced below for ready reference: Section 30: Submission of resolution plan. (1) A resolution applicant may submit a resolution plan 1 [along with an affidavit stating that he is eligible1A under section 29A] to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the [payment] of other debts of the corporate debtor; [(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than- (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in subsection (1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... security interest of a secured creditor] and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section.] [Provided also that the eligibility criteria in section 29A as amended by the Insolvency and Bankruptcy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later. Provided that where the resolution plan contains a provision for combination, as referred 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. 38. The CoCs are the best judge to analyze, pick up and take prudent commercial decision for the business but they are also subjected to test of prudence in order to ensure fairness and transparency. 39. The level of haircut being unprecedented and involving large public interest involving thousands of crore of public money requires perhaps deep thinking and cool calculation by the CoC and as a result of which perhaps, they have taken cognizance of certain judicial wisdom in a true spirit and accordingly wishes to review their own decision. In any case, when they are reviewing their own decisions the same has to go through the deliberation, public grudge, loss of public money and perhaps revaluation. 40. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicating Authority. Section 30(2) of the Code has also not been complied with. The said plan provides for payment to the Dissenting Financial Creditors by way of NCD and Equities which is impermissible as per the Code. Paras 3.5.4, 3.5.2 of the Resolution Plan (at page 237 -239 of the Appeal paper book) are not in accordance with the directions given by the Hon ble Supreme Court in the case of Jaypee Kensington Boulevard Apartment Welfare Association and Ors. Vs. NBCC (India) Ltd. Ors., (Civil Appeal No. 339 of 2020 decided on 24.03.2021) which are as follows: 124. To sum up, in our view, for a proper and meaningful implementation of the approved resolution plan, the payment as envisaged by the second part of clause (b) of sub-section (2) of Section 30 could only be payment in terms of money and the financial creditor who chooses to quit the corporate debtor by not putting his voting share in favour of the approval of the proposed plan of resolution (i.e., by dissenting), cannot be forced to yet remain attached to the corporate debtor by way of provisions in the nature of equities or securities. In the true operation of the provision contained in the second part of sub-cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re as part redemption amount of NCDs will be paid within 25 months from the closing date and the balance amount of Rs. 6,25,00,00,000/ each is spread over in 4 instalments starting from 3rd year onwards up to sixth year from the closing date and the interest rate for the NCDs is also a nominal of only 6.65% P.A payable annually. It may also be noted that at the time of granting loan, restructuring, approving the resolution plan with such a huge hair cut also the financial institutions, Committee of Creditors consisting 35 members exercised their Commercial Wisdom. Since this is the Commercial Wisdom of the COC and as per the various judgements of the Hon ble Supreme Court and by following the judicial precedents, discipline the Adjudicating Authority approves the resolution plan of the Successful Resolution Applicant with a suggestion, request to both CoC and the Successful Resolution Applicant to increase the pay-out amount to these Operational Creditors especially MSMEs. 9. The registered valuers have valued the assets of the 13 companies situated throughout the country and the 13 companies have varied business interests, products, segments viz oil and gas assets, Consumer Ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Resolution Plan is not found in contravention of any of the provisions of Section 29A of the Code and is in accordance with Law. Hence the same deserves approval with following observation and direction to the CoC to make payments as per liquidation value to all the dissenting Financial Creditors in cash upfront before any payment is made to assenting Financial Creditors as per the judgment of the Hon ble Supreme Court in the matter of Jaypee Kensington Boulevard Apartments Welfare Association Ors. Vs NBCC (India) Ltd. Ors. matter. The above para of the impugned order reflects that the Adjudicating Authority has made certain observations and require reconsideration by the CoC so the resolution plan should have gone for a review to the CoC as it fails to meet the criteria of Section 30(2)(b) r/w Section 31 of the Code. 44. The Hon ble Supreme Court in Sakri Vasu s. State of UP Ors. (2008) 2 SCC 409, case compilation Vol.I, Page 10-18, para 18, 21 @ pg. 15) has even affirmed this understanding and held as under: It is well-settled that when a power is given to an authority to do something it includes such incidental or implied powers which would ensure the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to hold that they will be powerless or that they do not possess any implied or incidental power to withdraw or cancel the approval, would make the M.U.Act unworkable and its provisions meaningless. In several cases of this nature, the Hon ble Supreme Cot has applied doctrine and principle of implied power. That principle is founded on the premises that conferment of a statutory power would necessarily take within its import he authority to use all means to make effective and meaningful.( ) 45. All these reflect that power to reconsider any decision is within the domain of CoC and even Hon ble Apex Court in Catena of judgment held that the commercial wisdom of the CoCs is non justifiable and hence, it is in the domain of CoC, particularly, if at a later stage, it finds in public interest and the amount of loss which the public exchequer is to bear with such unprecedented haircut in such a large fund employment, it is in the fitness of thing that the proposal can be remanded back to the CoC, particularly, in view of their own affidavit to review their decision. The CoC is not functus officio on the approval of the Resolution plan and accordingly, the judicial precedents clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 46. Hence, we are of the considered view that the resolution plan is not complying with Section 30(2)(b) of the Code r/w Section 31 of the Code. Hence, it can be remanded back to the CoC. 47. Incidentally, we have also observed that Section 31(4) of the Code states as follows: Provided that where the resolution plan contains a provision for combination, as referred 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. 48. Section 5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an rupees twelve thousand crore; or (B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars or turnover of more than six billion US dollars; or (c) any merger or amalgamation in which (i) the enterprise remaining after merger or the enterprise created as a result of the amalgamation, as the case may be, have, (A) either in India, the assets of the value of more than rupees one thousand crore or turnover of more than rupees three thousand crore; or (B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars or turnover of more than fifteen hundred million US dollars; or (ii) the group, to which the enterprise remaining after the merger or the enterprise created as a result of the amalgamation, would belong after the merger or the amalgamation, as the case may be, have or would have, (A) either in India, the assets of the value of more than rupees four thousand crore or turnover of more than rupees twelve thousand crore; or (B) in India or outside India, the assets of the value of more than two billion US dollars or turnover of more than six billion US dol ..... 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