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TMI Blog2024 (7) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... tory violations and irregularities in the valuation process conducted by the RP. There are no reasons to disagree with the Adjudicating Authority that the alleged imposition of ban by SEBI on the promoters of the SRA does not hold good because the Securities Appellate Tribunal had set aside the orders of the SEBI - the SRA was eligible to submit the resolution plan for the Corporate Debtor. Thus, even on this count the Appellant has hopelessly failed to validate their contention of alleged irregularity. When the CoC has approved the Resolution Plan by 100% voting share after considering its feasibility and viability, such decision of CoC is a commercial decision. There can be no fetters on the commercial wisdom of the CoC. It is settled law that commercial wisdom of CoC in approving the Resolution Plan is not to be interfered in the exercise of jurisdiction of judicial review either by the Adjudicating Authority or by this Tribunal in the exercise of its appellate powers - The Adjudicating Authority can reject the resolution plan only when there is noncompliance of Section 30(2) of IBC. There are no adequate grounds shown or material placed on record by the Appellant as to how the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solvency Resolution Process ( CIRP in short) of the Corporate Debtor for realisation of a total debt amounting Rs.231.09 cr comprising of Rs.149.05 cr as principal and Rs. 82.04 cr as interest. The Adjudicating Authority admitted the Section 7 petition on 11.12.2019 admitting the Corporate Debtor into CIRP. 3. Carrying the CIRP process forward, the Resolution Professional ( RP in short) invited EOI by issuing a public notice in Form-G on 28.01.2020 in terms of Regulation 36A(1) of the IBBI (Insolvency Process Regulations for Corporate Persons) Regulations,2016 ( CIRP Regulations in short). The timelines for submission of EOI got extended from time to time with the approval of the Committee of Creditors ( CoC in short) till January, 2021. The RP also appointed Registered Valuers for valuation of the assets of the Corporate Debtor and the first CoC meeting held on 10.01.2020 had approved the appointment of these valuers. Basis their valuation reports dated 09.07.2020, 08.09.2020 and 09.10.2020, the average liquidation value of the Corporate Debtor was determined as Rs.83.52 Cr. and the fair value fixed at Rs.118.88 Cr. 4. Pursuant to the issue of Form-G, 17 EOIs were received. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng documents/permissions obtained by the Corporate Debtor for running its business activities. 8. We have heard Mr. Abhijeet Sinha, Learned Sr. Advocate representing the RP and Ms Pooja Mahajan representing the CoC and Bank of Baroda as the sole member of the CoC. Mr. Kaustubh Prakash, Learned Counsel for SRA was also heard. Since their line of arguments overlap, for reasons of convenience, we are clubbing them together. Refuting the contentions raised by the Appellant, the Learned Counsels for the Respondents submitted that the IBC provides a well-defined mechanism to be followed for valuation of the Corporate Debtor as laid down in the CIRP Regulations. The RP adhered to the relevant CIRP Regulations and got the valuation duly conducted by IBBI registered valuers for determining an estimate of fair value and liquidation value of the Corporate Debtor as on the insolvency commencement date. 9. The Learned Counsel for Respondents also vehemently contended that the SRA was not disqualified under Section 29-A of IBC. It was pointed out that the allegation made by the Appellant that the SRA was ineligible for making submission of Resolution Plan owing to imposition of penalty by SEBI a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd arbitrary manner with a view to sell the assets of the Corporate Debtor at an under-valued price. 12. At this juncture, we need to analyse as to whether the process of valuation contemplated under the relevant CIRP Regulations were duly followed or not by the RP. CIRP Regulation 27 requires the RP to appoint two registered valuers to determine the fair value and liquidation value of the Corporate Debtor in accordance with CIRP Regulation 35. We may quickly run our eyes through CIRP Regulation 35 which is to the effect: 35. Fair value and Liquidation value. (1) Fair value and liquidation value shall be determined in the following manner:- (a) the two registered valuers appointed under regulation 27 shall submit to the resolution professional an estimate of the fair value and of the liquidation value computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor; (b) if in the opinion of the resolution professional, the two estimates of a value are significantly different, he may appoint another registered valuer who shall submit an estimate of the value computed in the same manner; an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icularly, the minutes of second, fourth, sixth and seventh CoC meetings stand testimony to the fact that the requirements of Regulation were scrupulously followed and complied with and there had not been any doubt in CoC as regards the process of valuation as also supplying of fair and liquidation value to the members of CoC. The detailed findings of the adjudicating authority in this regard (reproduced in para 60 hereinabove) make it clear that the adjudicating authority independently applied its mind to the process of valuation and presentation of the matter to CoC. Rejection of all the objections in that regard by NCLT, called for no interference. 136. The Appellate Tribunal appears to have unnecessarily and rather unjustifiably presumed that there had been blatant statutory violations and irregularities. Even if certain issues were raised in some of the meetings of CoC as regards the process of valuation, the clarifications from the resolution professional and the steps taken by him for valuation and re-valuation had been to the satisfaction of CoC .. 15. When we apply the ratio of the Gounder judgment supra in the present facts of the case, we find that the CIRP Regulations 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This point has been dealt with in the case of Essar Steel (supra). We have quoted above the relevant passages from this judgment. 27. It appears to us that the object behind prescribing such valuation process is to assist the CoC to take decision on a resolution plan properly. Once, a resolution plan is approved by the CoC, the statutory mandate on the Adjudicating Authority under Section 31(1) of the Code is to ascertain that a resolution plan meets the requirement of sub-sections (2) and (4) of Section 30 thereof. We, per se, do not find any breach of the said provisions in the order of the Adjudicating Authority in approving the resolution plan. 17. This brings us to a related submission made by the Appellant that the RP had avoided furnishing a copy of the resolution plan approved by the CoC to the Appellant in spite of requests made for furnishing copy of the resolution plan and relevant minutes of the meeting of the CoC. However, when we see the pleadings made by the Appellant in I.A. No. 1768 of 2021 filed before the Adjudicating Authority as placed at page 541-556 of Appeal Paper Book ( APB in short) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not find any substance in the contentions of Applicant. 15. We find that the Plan has been passed by the CoC by requisite majority in its commercial wisdom and this Bench has limited jurisdiction to interfere in the exercise of such discretion. The Applicant has not brought on record any deviation from the RFRP or Evaluation Matrix and has also not pointed out any malafide in the exercise of commercial wisdom by the CoC or carrying of the process by RP. It is an undisputed fact that valuation of the Corporate Debtor was carried out by IBBI registered valuers in accordance with the Code and the SRA has presented the Plan being conscious of the Regulations relating to height and operation of Hotel. We are of considered view that we ought not to interfere in the decision making process as regards viability if the CoC has considered the financial plan submitted by SRA to be a viable proposition. 30. The RP issued information memorandum, evaluation matrix and Request For Resolution Plan ( RFRP ) to the PRAs to enable them to submit a viable Resolution Plan for the Corporate Debtor. 31. Pursuant to the Request for Resolution Plan, Finquest Financial Solutions Private Ltd. and Jaldhara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Financial Solutions Private Ltd and Mr. Jiten K Ajmera before the COC members in its l0th CoC meeting held on 10.03.2021 for discussion, wherein, the COC members, requested the RP to put both the Resolution Plans for evoting. 34. The agenda for approval of both the above Resolution Plans was put for e-voting, which was kept open from 15.03.2021 till 31.03.2021. Bank of Baroda holding 100.00% voting share voted in favour of Resolution Plan submitted by Finquest Financial Solutions Private Ltd. and also approved filing of the Resolution Plan of Finquest Financial Solutions Private Ltd, Successful Resolution Applicant ( SRA ), before this Hon'ble Tribunal for approval u/s 30(6) of the Code on 31 March, 2021. 22. It is the case of the Respondents that it is not for the Adjudicating Authority to consider or evaluate on merits the rationale underlying the commercial decision of the CoC. While considering a resolution plan under Section 31 of the IBC, the jurisdiction of the Adjudicating Authority is circumscribed by Section 30(2) of IBC and it cannot analyse or evaluate or sit on judgment over the commercial decision of the CoC. We do not find any plausible grounds to differ with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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