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TMI Blog2024 (2) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... e 8th CoC meeting and 9th CoC meeting as extracted above clearly indicate that the plan of the Appellant was duly considered. In the minutes, it was also noticed that the Appellant had proposed sale of the Calcutta factory in which State Bank of India had a charge. Thus, all aspects of the plan including the plan value of Appellant as well as Respondent No.16 were in the knowledge of the CoC and were deliberated before voting - the Resolution Plan was approved by the CoC after due consideration. It is well settled that the commercial wisdom of the CoC in approving the Resolution Plan is not open to judicial review and there are very limited ground to interfere with the decision i.e. only when the plan is in violation of any statutory provision like Section 30(2) of the Code. The submission of the Appellant that Swiss Challenge Method was not adopted with regard to plan of the Appellant also need no consideration. Swiss Challenge Method was adopted between Respondent No.5 and Respondent No.16 when the plan of the Appellant was not compliant and Respondent No.16 was declared as H-1. Thus, when plan of the Appellant was directed to be considered by the Adjudicating Authority on 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 022, Resolution Professional informed the CoC that he has received three Resolution Plans. In the 6th CoC meeting held on 20.06.2022, discussion on Resolution Plans submitted by PRAs was made. The Appellant who had filed Resolution Plan has not submitted the EMD of Rs. 1 Crore, his plan was treated as non-compliant and the CoC decided to conduct a Swiss Challenge Process between two Resolution Applicants i.e. Eastern Copper Manufacturing Company Pvt. Ltd. and Sreenath Finvest Private Limited . In the Swiss Challenge Method, Eastern Copper Manufacturing Company Pvt. Ltd. was held to be H-1, having given the Resolution Plan of Rs.10.51 Cr. Sreenath Finvest Private Limited was held to be H2. Appellant filed an application before the Adjudicating Authority praying for direction to CoC and Resolution Professional to allow the applicants to make payment of EMD of Rs.1 Crore and to consider the Resolution Plan of the Appellant. Adjudicating Authority passed an order on 30.09.2022 in IA No.900/KB/2022 filed by the Appellant by which the Adjudicating Authority issued following directions in paragraphs 22 and 23:- 22. Thus keeping in mind the main objective of the Code which is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge method in the voting process for approval of the resolution plan. g. An order of injunction be passed restraining the respondents from taking any steps in respect of the e-voting result and/or the scrutinizer's e-voting report dated 21 October, 2022; 2.3. The Adjudicating Authority heard the parties on both the IAs being IA No.1330/KB/2022 and IA No.1523 of 2022 and by separate order passed on 05.01.2024 allowed the IA No.1330/KB/2022 approving the Resolution Plan and the order of the same date rejected the IA No.1523 of 2022 filed by the Appellant. Appellant aggrieved by both the aforesaid order has come up in these Appeals. 3. We have heard Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant, Shri Shaunak Mitra, Learned Counsel for the Resolution Professional and Shri Krishnendu Datta, Learned Senior Counsel for the Successful Resolution Applicant (SRA). 4. Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant challenging the order passed by the Adjudicating Authority dated 05.01.2024 approving the Resolution Plan as well as rejecting IA No.1523(KB)2022 filed by the Appellant submits that the Appellant being promoter of the Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced above, it is clear that the Resolution Plan which was submitted earlier by the Appellant did not have EMD, hence, it was held to be non-compliant and in the Swiss Challenge Process which was undertaken between Respondent No.5 and Respondent No.16, Respondent No.16 was held to be H-1. It was only subsequent to the order dated 30.09.2022 passed by the Adjudicating Authority that the Appellant submitted EMD and his plan was put for consideration in the 8th CoC meeting held on 08.10.2022. 9. Plan of the Appellant was also decided to put on vote and after result of the voting, plan of SRA has been approved. 10. The grievance which has been raised by the Appellant is that there is no proper consideration of the plan submitted by the Appellant even though he has submitted the EMD of Rs.1 Crore after the order dated 30.09.2022. The minutes of 8th CoC meeting held on 08.10.2022 has been brought on the record. In the 8th CoC meeting, the Appellant as a Director of the Suspended board was also present. The CoC took note of the order dated 30.09.2022 an EMD of Rs.1 Crore submitted by the Appellant on 02.10.2022. Under the Agenda Item No.5, it was noticed that the CoC members requeste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess as CIRP is a time 2022 so that all the d that coc members must also simultaneously evaluate the plan email their observation or queries on the plan. It was informed that the next CoC meeting would be called shortly within few days after plan of Mr. Damani is evaluated by the Resolution Professional. 11. After the 8th CoC meeting, the plan submitted by the Appellant was examined by the Resolution Professional and the observations of the Resolution Professional was circulated. Those observations were also communicated to the Appellant. It was communicated that the CIRP period was expiring on 27.10.2022. 9th Meeting of the CoC was convened for 15.10.2022 in which meeting the plan submitted by the Appellant was discussed in Item No.4. Discussion in Item No.4 is relevant to notice which is as follows:- Item No. 4 TO DISCUSS THE RESOLUTION PLAN SUBMITTED BY MR. RAJESH DAMANI : Pursuant to the discussion in the last COC meeting the where the chairman had informed the COC members regarding the order passed by the Hon ble NCLT Kolkata Bench dated 30.09.2022. Whereby the Hon'ble NCLT has directed that the Resolution Plan submitted by the suspended board i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed total plan value of Rs. 12 Crores and further Rs.3 crores for working capital towards improving the operations in the company. It was stated that Rs.815.50lac is proposed to be paid to secured financial creditors, Rs.200lac proposed to be paid to unsecured financial creditors, Rs.24.50lacs to workmen employees and Rs.160lac less CIRP cost to operational creditors. It was further submitted that he proposes to make the payments by way of upfront payments within 60 days and that as per him his plan provides maximum total value to all the creditors. On the query raised by one of the CoC members, Mr Damani had explained that he shall make arrangements to sell the factory of the corporate debtor situated at Kolkata and that he shall make all the arrangements to make the Vadodara plant a going concern he further explained that the decision for the same has been taken after considering the well being of all the stake holders and for the maximization of the assets of the corporate debtor. Mr Sridip from State Bank of India had asked Mr Damani that he must be aware that State Bank of India has charge on the factory of the corporate debtor situated at Kolkata and that he can only sell t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nkruptcy Code 2016 and Other Regulations as specified under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 including amendments, if any, by the Board, the Committee of Creditors, in pursuance to Sec. 30 of the Insolvency and Bankruptcy Code 2016 and subject to the approval of the Hon'ble National Company Law Tribunal, Kolkata Bench, the COC hereby approves the Resolution Plan submitted by the Suspended Board ie Mr. Rajesh Damani being the Resolution Applicant. Resolution professional is further authorised to issue LOI in term of RFRP and submit the application along with compliance certificate in Form H before the Hon'ble NCLT for its approval. ( THIS WILL BE TAKEN AS Resolution 5 FOR EVOTING ) The RP informed that as per the Regulation 25, IBBI (CIRP) Regulation, 2016, RP shall take a vote of members of the committee present in the meeting and seek a vote of the members who did not vote at the meeting on the matters listed for voting by electronic voting system. It was further communicated that EVoting may be opened for the all the member as no physical voting has taken place. The e-voting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Committee of Creditors, nothing can be done qua the management of the corporate debtor by the resolution professional which impacts major decisions to be made in the interregnum between the taking over of management of the corporate debtor and corporate resolution by the acceptance of a resolution plan by the requisite majority of the Committee of Creditors. Most importantly, under Section 30(4), the Committee of Creditors may approve a resolution plan by a vote of not less than 66% of the voting share of the financial creditors, after considering its feasibility and viability, and various other requirements as may be prescribed by the Regulations. 14. The Hon ble Supreme Court in earlier judgment i.e. K. Sashidhar v. Indian Overseas Bank- (2019) 12 SCC 150 has held that the commercial wisdom of the CoC in approving the plan has to be given due regard. Paragraph 52 of the judgment is as follows:- 52 .Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I B Code. There is an intrinsic assumption that financial creditors a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing IA No. 1330 of 2022 approving the Resolution Plan. 17. The Adjudicating Authority while considering IA No. 1523 of 2022 filed by the Appellant has considered all submissions advanced by the Appellant and has also returned a finding that the plan of the Appellant was deliberated upon and found not to be viable. In paragraphs 15, 18, 19 and 20 of the judgment, following was observed:- 15. We have considered the submissions. We have already extracted the gist of CoC Minutes particularly the 5th 6th 7th 8th and 9th Meetings. We have already noticed that the Plan of PMPL was deliberated upon and found to be not viable and feasible in view of the fact that the Plan proposed selling of the Kolkata Plant and disclosed that an interested buyer has given its commitment on 15.11.2022 etc. It was argued for PMPL that at least Mr. Damani had disclosed the source of funds which ECMPL Plan did not do. It was argued that the ECMPL Plan is feasible but not viable, since it does not disclose source of funds, provides NIL. payments to Operational Creditors and yet it is passed without giving the MSME Promoter a level playing field. 18. We have noted that the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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