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TMI Blog2024 (1) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity to do so as he had the locus to attend the CoC meetings. The only reason given by the Learned Counsel for the Appellant for not raising the objection regarding the constitution of CoC at the appropriate time is that the Appellant was unwell. This cannot be a substantial ground as it is an admitted fact that the Appellant had sufficient opportunities to attend the meetings and raise his grievances. The Hon ble Supreme Court in a catena of Judgements, most recent being Kalparaj Dharamshi Anr. vs. Kotak Investment Advisors Ltd. Anr [ 2021 (3) TMI 496 - SUPREME COURT ] has observed that the commercial wisdom of CoC must be adhered to unless the Adjudicating Authority is not satisfied that the requirement of sub-section (2) of Section 30 of the Code has been complied with. In the instant case, the approval of the Resolution Plan below the Liquidation value is within the commercial wisdom of the CoC as the Code does not expressly bar that the Resolution Plan value should be over and above the Liquidation value. Hence, there is no material irregularity. As regarding the contention of the Learned Counsel for the Appellant that the Operational Creditor Kerala Ayurvedic Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany (EARCL), which was the assignee of the debt from Federal Bank on 10.12.2012, enjoying a charge of Rs. 5.21 Crores plus interest in relation to a Corporate Guarantee from the Corporate Debtor in favour of the debt availed by another group Company, namely Orient Extraction Pvt. Ltd. It is submitted that neither Edelweiss nor Federal Bank had filed a Claim with the RP. It is contended that had Edelweiss been included in the CoC, it would have constituted 80% of the voting share and even though Edelweiss did not submit its claim, the (Resolution Professional) was duty bound to inform Edelweiss about the pendency of the CIRP proceedings. 4. It is also strenuously argued by the Learned Counsel for the Appellant Mr. Avinash Krishnan Ravi that de hors the illegal constitution of the CoC, the Corporate Debtor has been improperly valued as four assets which were mortgaged to Federal Bank were not included in the valuation Report. It is also submitted that several properties worth Rs. 25 Crores (and almost five times the Liquidation value), has been omitted, which is glaring, as the actual fair value is Rs. 9.52 Crores and the Liquidation value is Rs. 5.09 Crores. It is submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, 2016. Having not exercised its right in the form of filing a Claim, the Appellant cannot have any grievance that Edelweiss was not included in the CoC. It is pertinent to mention that the Appellant / Promotor did not raise any objections regarding the constitution of the CoC, having had the Notice and the opportunity to do so as he had the locus to attend the CoC meetings. The only reason given by the Learned Counsel for the Appellant for not raising the objection regarding the constitution of CoC at the appropriate time is that the Appellant was unwell. This cannot be a substantial ground as it is an admitted fact that the Appellant had sufficient opportunities to attend the meetings and raise his grievances. Not being vigilant at that stage, the Appellant cannot now, raise at this belated stage, after the approval of the Resolution Plan, that the CoC was not properly constituted, specifically when Edelweiss itself has not chosen to file a Claim . 8. The Hon ble Supreme Court in a catena of Judgements, most recent being Kalparaj Dharamshi Anr. vs. Kotak Investment Advisors Ltd. Anr. 2021 SCC OnLine SC 204 has observed that the commercial wisdom of CoC must be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan Under Section 30(4) of the I B Code. 148. It has been held, that in an enquiry Under Section 31, the limited enquiry that the Adjudicating Authority is permitted is, as to whether the resolution plan provides: (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) the plan does not contravene any of the provisions of the law for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that it is only an opinion of the minority financial creditors..... 152. This Court in Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra) after reproducing certain paragraphs in K. Sashidhar (supra) observed thus: Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of Section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar. 153. It can thus be seen, that this Court has clarified, that the limited judicial review, which is available, can in no circumstance trespass upon a business decision arrived at by the majority of CoC. 154. In the case of Maharashtra Seamless Limited (supra), NCLT had approved the plan of Appellant therein with regard to CIRP of United Seamless Tubulaar (P) Ltd. In appeal, NCLAT directed, that the Appellant therein should increase upfront payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the successful resolution applicant to enhance their fund inflow upfront. ( Emphasis Supplied ) 9. In the instant case, the approval of the Resolution Plan below the Liquidation value is within the commercial wisdom of the CoC as the Code does not expressly bar that the Resolution Plan value should be over and above the Liquidation value. Hence, there is no material irregularity. As regarding the contention of the Learned Counsel for the Appellant that the Operational Creditor Kerala Ayurvedic Limited was getting an amount lower than the Liquidation value and hence the Plan is discriminatory is untenable, keeping in view that the very same Operational Creditor had voluntarily agreed to accept an amount lower than the Liquidation value. We are of the considered view that the ratio of Kalparaj Dharamshi (Supra) is squarely applicable to the facts of this case as the Resolution Plan is approved by a 100 % voting share of the CoC and there is no material irregularity on the face of record and we are satisfied that the Resolution Plan conforms to the requirement set out in sub-section (2) of Section 30 of the Code. As regarding the contention of the Learned Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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