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TMI Blog2024 (10) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... r Mahajan, Ms. Geetika Sharma, Ms. Shreya Mahal war, Advocates for SRA/R-3 Mr. Ravi Kadam and Mr. Sunil Fernandes, Sr. Advocates with Mr. Bishwajit Dubey, Mr. Ramakant Rai, Mr. Somesh Srivastava, Mr. Rajshree Chaudhary, Ms. Diksha Dadu, Advocates for R-1. JUDGMENT ASHOK BHUSHAN, J. These Appeal(s) by unsuccessful Resolution Applicants have been filed challenging the same order dated 13.08.2024 passed by National Company Law Tribunal, Mumbai Bench-IV, allowing IA No.2794 of 2023 filed by Resolution Professional ("RP") for approval of the Resolution Plan submitted by Sarda Energy and Minerals Ltd. ("SEML") (one of the Respondent herein). By the impugned order, IA No.3399 of 2023 filed by Torrent Power Ltd. and IA No.3336 of 2023 filed by Vantage Point Asset Management Pte. Ltd. have been rejected by the Adjudicating Authority. Intervention Petition No.40 of 2024 filed by Jindal Power Ltd. also came to be rejected by the impugned order. All the three unsuccessful Resolution Applicants by these Appeal(s) have challenged the orders of the Adjudicating Authority approving the Resolution Plan of SEML as well as order passed in different IAs filed by the Appellant(s), details of which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as conducted for approval of Resolution Plans from 28.05.2023 to 08.06.2023. By voting result dated 08.06.2023, the Resolution Plan of SEML as amended read with addendum dated 10.05.2023 was approved with 100% vote share. (vi)On 08.06.2023, the RP issued a Letter of Intent ("LoI") to SEML, who was called upon to submit Performance Bank Guarantee ("PBG") of INR 150 crores. On 12.06.2023, SEML unconditionally accepted the LoI and submitted PBG of INR 150 crores in favour of Bank of Baroda. (vii)On 14.06.2023, Vantage Point Asset Management Pvt. Ltd. has sent an email to the RP, offering to increase its financial proposal by INR 50 crores with object to maximise the value of the Corporate Debtor. Another email was sent by Vantage Point Asset Management Pvt. Ltd. on 16.06.2023 reiterating the same prayer. The CoC held its 32nd meeting on 17.06.2023 rejecting the offer of Vantage Point Asset Management Pvt. Ltd. submitted on 14.06.2023 with 100% vote share. (viii)On 17.06.2023, RP filed an IA No.2794 of 2023 before the Adjudicating Authority praying for approval of Resolution Plan of SEML as approved by the CoC with 100% vote share. On 20.06.2023, RP informed all Resolution Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Arjunkumar Rathi, the RP has also filed Company Appeal (AT) (Ins.) No.1535 of 2023. Jindal Power Ltd. has filed an Intervention Application being IA No.1214 of 2023 in Company Appeal (AT) (Ins.) No.1395-1397 of 2023. All the aforesaid Appeal(s) were heard by this Tribunal and vide judgment and order dated 10.05.2024, all the Appeal(s) were decided by this Tribunal. The operative portion of order of this Tribunal passed on 10.05.2024 is as follows: "89. In view of the foregoing discussions, we dispose of all these Appeals in following manner: (i)The impugned order dated 06.10.2023 passed in IA No.2794 of 2023, IA No.3336 of 2023 and IA No.3339 of 2023 is set aside. (ii)The Plan approval Application, i.e., IA No.2794 of 2023 and other two Applications, i.e. IA No.3336 of 2023 and IA No.3339 of 2023 are revived before the Adjudicating Authority for fresh decision. (iii)The Plan approval Application is pending from June 2023; we request the Adjudicating Authority to dispose of the Plan approval Application and other two Applications at an early date, preferably within a period of 60 days from today." (xv)On 02.06.2024, an Intervention Petition No.40 of 2024 was filed by Jin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor herein, in due consonance with paras {87} r/w. {89} of the NCLAT Order. We have further deemed it fit to additionally consider two Interlocutory Applications (bearing I.A. Nos. 3286 of 2023 and 3654 of 2023) and two Intervention Petitions (bearing IVN. P. 40 of 2024 and 41 of 2024), filed during the pendency of the afore- mentioned I.A. Nos. 2794 of 2023, 3336 of 2023 and 3399 of 2023. The captioned application has been dealt at Page No. [80] of this Order hereto." 4.Part-I deals with IA No.3336 of 2023. Prayers made in the Application filed by Vantage Point Asset Management Pvt. Ltd. has been noticed in paragraph 8, which are as follows: "8. The instant application bearing I.A. No. 3336 of 2023 has been filed on 01.08.2023, by Vantage Point Asset Management Pvt. Limited ("VPAM") against the Resolution Professional viz. Respondent No. 1 herein (Applicant RP in the captioned application) and the Committee of Creditors of Corporate Debtor (CoC) viz. Respondent No. 2 herein. The Applicant in the instant application has sought for the following: "A) This Tribunal be pleased to allow the Applicant to intervene in Interlocutory Application No. 2794 of 2023 and be impleaded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is not open for this Tribunal to undertake any (quantitative) analysis apropos the same. It was only after such examination that the Resolution Plan(s) (including that of the Applicant hereto) were put up for voting during the 31st Meeting of the CoC. Furthermore, the Apex Court in Essar Steel India (supra) has categorically observed the following: "46 ... There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or subclass 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out by the advisors appointed by the lenders to evaluate the plans. The CoC, considering the interests of all stakeholders, in a fair and transparent manner, deliberated and considered each Resolution Plan holistically before making its decision and had exercised their commercial wisdom. In view of the same, considering that the Resolution Plan of the SRA has been voted with 100% majority, he expressed that there is no justification for accepting the request of VPAM, while it is also not legally possible as pointed out by the legal counsels. The views of SBI were also sought on this matter, and SBI representative stated that they concur with the views of Bob and the Legal Counsels." {emphasis applied}" 7.One of the prayers of the Applicant that he should be given copy of Resolution Plan of Successful Resolution Applicant was also not acceded to. Consequently, the Adjudicating Authority rejected the Application filed by Vantage Point Asset Management Pte. Ltd. 8.In Part-II of the order, the Adjudicating Authority dealt with IA No.3399 of 2023. Prayers in IA No.3399 of 2023 have been extracted in paragraph 15 of the order of the Adjudicating Authority, which are as follows: "a. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that clarification should be given by way of an Addendum. The Resolution Applicants, who were asked the clarification, had provided the clarification. The CoC during submission has rightly submitted that the said clarification was asked under the directions of the CoC, which is fully permissible as per the provisions of RFRP and Process Note, which empowers the CoC to ask for clarification from any Resolution Applicant. It is submitted that clarification was asked from all Resolution Applicants and there cannot be any modification of any financials by clarification and no modification was made to the earlier Resolution Plan. It is relevant to notice that the said argument was considered and did not find favour with the Adjudicating Authority. This clarification was not asked only from the Appellant - Sarda, rather, they said clarification was asked from all other Resolution Applicants. In paragraph 8.2, the Adjudicating Authority has noticed that email dated 08.05.2023 was sent to each Resolution Applicant to clarify and such clarification was sought in accordance with the decision taken in the CoC Meeting. We do not find any substance in the submission on behalf of Torrent Power L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on Clause 4.1.8 of RFRP, which clearly provided that the CoC is under no obligation to any of the Resolution Applicant to approve the Resolution Plan, which has secured the highest value as per the Evaluation Matrix and any Resolution Plan shall be approved solely based on CoC's commercial wisdom. To the same effect is Clause-9(c) and 9(d) of the Process Note dated 12.04.2023, where the CoC has reserved its right to evaluate the compliances of Resolution Plans and accept or reject the Resolution Plans." {emphasis supplied}" 10.The Adjudicating Authority has further noticed that in pursuance of order dated 07.08.2023 passed by the Bench, RP has sought to place affidavits dated 10.08.2023 and 20.08.2023, which affidavits were taken on record for consideration of the Applications. In paragraph 21.4, the Adjudicating Authority held that the clarification sought by RP, does not constitute any discrimination qua the Applicant as clarification was sought from all the Resolution Applicants. The Adjudicating Authority further noticed the relevant clauses of Process Note and RFRP, which empowers the CoC to seek clarification from one/ all Resolution Applicants to give effect to its c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... versity and/ or discrimination in the process has also been dealt with. The prayer of the Applicant seeking copy of the Resolution Plan was not acceded to. Consequently, IA No.3399 of 2023 filed by Torrent Power Ltd. was rejected. 12.Part-III of the order dealt with aspect of "incomplete financial data placed before the CoC of the Corporate Debtor in the decision-making process while approving the Resolution Plan", which was the basis of order dated 06.10.2023, earlier passed by the Adjudicating Authority (which now stands set aside by order dated 10.05.2024 of this Tribunal). The submission of RP, SRA and the CoC were noticed. The aspect of placing of incomplete data by RP and its Process Advisor, as well as treatment of the Bank Guarantees, were dealt in detail. The Adjudicating Authority has also noted the relevant judgment of the Hon'ble Supreme Court. The 34th meeting of the CoC dated 19.10.2023 was also noticed and relevant minutes were extracted by the Adjudicating Authority. The Adjudicating Authority held that tenets of bank guarantee(s), margin money infusion, and the treatment of equity, which were essentially a stratum of 'financial debt', have been thoroughly examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C members during the 30th and 31st CoC meetings and the decision arrived at by the CoC members seems to be unaltered." 31.Upon conflating and being bound by the nature (and scope) of jurisdiction exercisable by this Adjudicating Authority in this regard,more specifically so, in light of the Apex Court's judgement in Ngaitlang Dhar v. Panna Pragati Infrastructure Private Limited [CA No. 3665-3666 of 2020] and Vallal RCK v. M/S Siva Industries and Holdings Limited And Others [Civil Appeal Nos. 1811-1812 Of 2022] as afore-extracted respectively in para nos. [14.2] and [14.6] of this Order, concomitant to observations of Hon'ble NCLAT in this regard in para {73} of its Order dated 10.05.2024 and from a perusal of materials (including the minutes of 34th CoC Meeting dated 19.10.2023) relied upon the parties herein; We are of the shared view that the CoC has adequately dealt with the issue apropos 'incomplete financial data placed before the CoC of the Corporate Debtor in the decision-making process while approving the resolution plan' and has categorically affirmed that it "..has not found any factual inaccuracies referred to by the Hon'ble NCLT, and it has emerged that all numbers we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after detailed deliberations with the Counsels, the CoC members were of view that the observations of the Hon'ble NCLT appears to be at variance from the terms of the JPL Resolution Plan and further seems to be factually incorrect, as JPL is offering an amount of INR 101.1 Cr, out of which INR 83 Cr is towards financial creditors and the aforementioned paras deal with the scoring of the BGs as well. It was further noted that, the facts and numbers considered by the CoC in the evaluation of the JPL Resolution Plan were accurate and the scoring as per the evaluation matrix is appropriate." 14.The Adjudicating Authority from paragraph 45 to 59 has dealt with Application - IA No.2794 of 2023 and after examining different aspect of Resolution Plan has conclude that Resolution Plan meets the requirement of Section 30(2) of the IBC and Regulations 37, 38, 38(1A) and 39(4) of the Regulations, which need to be approved. The findings of the Tribunal are captured in Paragraph 51 to 59, which are as follows: "51. In the circumstances mentioned hereinabove, the Applicant Resolution Professional has filed this Application seeking approval of this Tribunal on the Resolution Plan, submitted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... government department/ authorities are granted hereto, and the same shall be dealt with by the respective competent authorities/fora/offices, Government (State or Central) about the respective reliefs, if any. Be that as it may, the Learned Counsel for the Applicant RP, during hearing on 04.07.2024, has categorically affirmed that the implementation of the Resolution Plan is not conditional or contingent upon grant of any or all such reliefs, concessions and dispensations by this Tribunal. 57.In the case of K Sashidhar (supra) the Hon'ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). 58.In CoC of Essar Steel (supra) the Hon'ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in them commercial wisdom has approved. In para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als, we shall notice the said submissions as submissions on behalf of the Appellants. An additional submission has been raised by the Appellants in 'Vantage Point Asset Management Pte. Ltd.' and 'Jindal Power Ltd.' which we shall separately notice. 19.Counsel for the Appellant challenging the impugned decision passed by the Adjudicating Authority dated 13.08.2024 contends that this Tribunal vide order dated 10.05.2024 set aside the earlier order of the Adjudicating Authority dated 06.10.2023 and remanding the matter for fresh consideration which obliged the Adjudicating Authority to consider all contentions raised afresh. Adjudicating Authority committed error in treating the remand as not an open remand rather treated the remand as restricted remand which vitiates the order of the Adjudicating Authority. The Adjudicating Authority merely placed reliance on remand order dated 10.05.2024 without taking note that remand order was an open unrestricted remand for a fresh decision. Learned Counsel for the Appellant contended that the Resolution Professional and the CoC selectively permitted the SRA (SEML) to modify its commercial offer after conclusion of the Negotiation Process on 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st highest offer and 'Torrent Power Ltd.', the 2nd highest offer. In support of second limb of arguments, it is submitted that Sarda has provided treatment of margin amount pertaining to bank guarantees listed in Item Nos.1 to 5 in its Resolution Plan submitted on 28.04.2023 and had offered to infuse INR 103.39 Crores as replacement of margin money. Bank guarantees listed at Item Nos.6 and 7 were not proposed to be continued so that the Resolution Plan did not provide for their treatment. Pursuant to clarification from the Resolution Professional with regard to bank guarantees at Item Nos.6 and 7, Sarda clarified that the margin money pertaining to such bank guarantees would be returned to the CoC as per terms of the RFRP. By way of the clarification email dated 10th May, 2023, Sarda has admitted that originally it had neither proposed to continue BGs at item nos. 6 and 7 nor proposed to infuse any amount towards the margin money for such BGs. Thus, clearly in relation to BGs at item nos. 6 and 7 (aggregating to INR 76.61 crores), Sarda did not offer any contribution toward the BGs at item nos. 6 and 7. Sarda has originally offered only replacement of INR 103.39 Crores by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said amount will become INR 2130.10 Crores. It is submitted that in the facts of the present case, the Tribunal may permit the Resolution Applicant to submit fresh revised plan. It is submitted that the Adjudicating Authority erroneously rejected application IA No.40 of 2024. JPL after becoming aware of the rejection of the plan in the resolution process has issued letter dated 09.01.2024 requesting the Resolution Professional and the CoC to conduct another round of auction. 22.Counsel for the CoC submits that the clarifications had been sought by the Resolution Professional from all the Resolution Applicants pursuant to a decision by the CoC in its meeting held on 06.05.2023. Such act of seeking clarification was pursuant to the rights of the CoC categorically set out in the RFRP. Counsel for the CoC has referred to Clauses 2.6.2(d), 2.6.2(g), 2.9.4, 2.9.7, 2.16.7, 2.18.5(t) and 4.1.5 of the RFRP. It is further submitted that the RFRP as well as the Process Note clearly set out that the CoC can vote on any Resolution Plan in its commercial wisdom. Under Clauses 9(a) to 9(e) of the Process Note, the RP/CoC reserve the right to evaluate the compliance of each plan and accept or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect. The deferred payment which was offered of INR 143.37 Crores at the end of 2nd year and INR 158.27 Crores at the end of 3rd year, applying 10% discounting, the said amount comes to INR 240 Crores, hence, NPV of INR 240 Crores was added in the upfront component which is clear from Appendix-I. The language of certain clauses of the Resolution Plan being not clear and there being some doubts, clarification was asked from SEML. 24.Coming to the bank guarantees infusion, it is submitted that Sarda was always offering INR 180.49 Crores under the plan in relation to bank guarantees. Clarification was sought on the modality and there was no change in the commercial offer. All Resolution Applicants provided different treatment with respect to margin money. Even before the clarification was sought, SEML had proposed that margin money of INR 180.4 Crores will be returned to the Corporate Debtor and shall be utilised for payment to the secured financial creditor. It is submitted that in the 34th CoC meeting held on 18th-19th October, 2023, the CoC had examined all the Resolution Plans and the aspect as to whether before the CoC all necessary financial data and materials were placed befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions of the Appellants submits that the arguments raised by the Appellant that SRA by way of clarification sent by e-mail dated 10.05.2023 has modified its financial offer is wholly incorrect. Appellants from time to time changed their stand at different stages of the present proceeding. It is submitted that the SRA in the bidding process held on 19.04.2023 offered both upfront payment and deferred payment which was permissible as per the RFRP and the Process Note. SRA along with Affidavit filed in Company Appeal (AT) (Insolvency) No. 1621 & 1622 of 2024 has brought on the record last Appendix submitted by SEML to Resolution Professional during negotiation process on 19.04.2023. Copy of e-mail dated 10.05.2023 sent by the SEML to the clarification mail dated 08.05.2023 has also been brought on record. Learned Counsel referring to Appendix-I which was submitted on 19.04.2023 contends that Appendix-1 itself clearly mentions that the upfront payment was offered by SEML of INR 1553 Crores and INR 143.37 Crores at the end of 2nd year and INR 158.27 Crores at the end of 3rd year as deferred payment. It is submitted that based on deferred payment offer given by the Resolution A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal by its order dated 10.05.2024 was open remand for fresh decision. Adjudicating Authority was obliged to consider all issues raised and Adjudicating Authority has not adverted to all submissions advanced by the Appellant and certain arguments were rejected relying on the earlier order of this Tribunal dated 10.05.2024. 29.These Appeals have been filed challenging the order of the Adjudicating Authority dated 13.08.2024. We proceed to examine all contentions advanced by the Appellants on merits to find out as to whether there are any grounds made in these Appeals to interfere with the order of the Adjudicating Authority approving the Resolution Plan which had approval of the CoC with 100% vote shares. Appellants have raised their submissions relying on Section 61(3)(ii) of the IBC. Provisions of Section 61(3)(ii) provides as follows:- "61. Appeals and Appellate Authority. - (3) An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely: - xxx xxx xxx (ii) there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period" 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Resolution Applicants, such Resolution Applicants may be required to submit a revised Resolution Plan or make any modifications/amendments to the Resolution Plan in writing. Such submissions made at the instructions/request of the CoC shall not be considered as submission of a Resolution Plan made after the Resolution Plan Submission Date." 33.Clause 2.9.4 begins with non-obstante clause reserving the absolute right of the CoC. Clause 2.9.4 is as follows: - "2.9.4. Notwithstanding anything contained in this RFRP, the CoC reserves the absolute right to (a)consider, accept or vote or any Resolution Plan, with or without modification, (b)reject any Resolution Plan without assigning any reason. (c)negotiate with all or any Resolution Applicant with a view of maximizing the Corporate Debtor's value, (d)decide any method or process for negotiations with the Resolution Applicant(s) regarding the Resolution Plans received prior to voting in accordance with Applicable Law, which may include, but shall not be limited to, a price discovery process, outbidding process, Swiss challenge process, etc. and each Resolution Applicant shall be hound by the terms governing such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP Professional Advisor (on behalf of the Resolution Professional) or the CoC shall make the Resolution Plan liable for rejection and the same may be treated as non-responsive." 36.Clause 2.18.5 contains heading 'acknowledgments and representations' which provides that by accessing/ obtaining RFRP and upon obtaining access to the Data Room and Information Memorandum, the Resolution Applicant is deemed to have made the following warranties, undertakings, acknowledgments and representations. Clause 2.18.5 (t) is as follows: - "(t) The Resolution Applicant hereby acknowledges that the Resolution Professional and/or the CoC may, at their sole discretion, at any time before the approval of the Resolution Plan submitted by the Successful Resolution Applicant(s), to their satisfaction, stipulate any additional conditions to be satisfied/ met by the Resolution Applicant and/or seek additional comforts/documents/ information from the Resolution Applicant." 37.The above sub-clause (t) is wide in scope which empowers the Resolution Professional and/or the CoC to ask for any additional conditions to be satisfied/ met by the Resolution Applicant and/or seek additional comforts/documents/ in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Negotiation Process under the Identified Criteria shall be strictly as per the format prescribed in Appendix I. The said Appendix 1 shall be duly submitted by the authorised representative of the Resolution Applicant. (xi)To ensure confidentiality, the details of the resolution plans of Resolution Applicants will not be disclosed. Only the financial proposal which is offering the Highest Value as per the Identified Criteria at the end of each round will be disclosed "Highest Value as per the Identified Criteria shall be the financial proposal with highest NIV as per the Identified Criteria for that particular round Note 1: It is clarified that the RP will display the following on the screen pertaining to the Resolution Applicant who has offered highest NPV as per the Identified Criteria at the end of each round: I. Upfront amount to Financial Creditors (i.e. the amount which will be paid within 45 days from the NCLT Approval Date as per the RFRP), II.Amount offered to other creditors, III.NPV as per the Identified Criteria Note 2: Each Resolution Applicant is required to specify the amount that is allocated by such Resolution Applicant towards the payment of the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r having noticed the relevant Clauses of RFRP and the Process Note, now we revert to respective submissions of the parties. As noted above, both Vantage and Torrent have filed the Applications before the Adjudicating Authority much after RP communicated the approval of Resolution Plan to unsuccessful Resolution Applicants. The Applications were filed by both Vantage and Torrent relying on newspaper report, which informed that financial offers given by Vantage was highest and Torrent was second highest and Sarda was third highest. As per the Appellants' submission commercial offer of Torrent, Vantage and Sarda as on 19.04.2023 were as follows: Upfront Deferred Operational Creditors Total Vantage [disclosed to all bidders since H1 bid] 1408.08 400 6.96 1815.04 Torrent 1790.00 0.00 20 1810.00 Sarda 1553 [Appendix 1 -Pg 4 of Sarda Affidavit] 240 12 [2.73 crores +9.27 crores - Pg 195. Vol I) 1805.00 42.We have already noticed relevant Clauses of RFRP, which clearly provided the fact that a Resolution Applicant who has given the highest offer cannot claim that his Resolution Plan is to be approved. It is the commercial wisdom of CoC to approve a Plan. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all keep all other relevant records ready for perusal the court if so required. Let affidavit be filed by Friday i.e; 23.08.2024. List these appeals on 30.08.2024." 46.In pursuance of the order of this Tribunal dated 21.08.2024, the RP has filed an affidavit bringing on record the email dated 08.05.2024 sent to the SRA. The email sent to other Resolution Applicants were also brought on record. An affidavit on behalf of SRA has also been filed in Company Appeal (AT) (Ins.) No.1621-1622 of 2024, bringing on record the Appendix-1, which was submitted by Sarda in Negotiation Process on 19.04.2023 as well as the reply dated 10.05.2023 sent by SRA to the email received from the RP. As noted above, two principal grounds of attack to the approval of Resolution Plan are with regard to replacement of Bank Guarantee and upfront payment of INR 240 crores, which was earlier given as deferred payment by the SRA. We may proceed to consider the submissions of the parties in seriatim of queries raised in the email dated 08.05.2023. We need to first notice the email dated 08.05.2023, which was sent to the RP to the SRA. It is useful to extract the entire email sent by RP to Resolution Applicant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are currently secured by margin money of INR 76.66 crore? The treatment of the aforesaid BGs is not clear from the Resolution Plan. Further, please clarify the treatment of the underlying margin money, if it is not released by the relevant issuing banks. (iii)If the Relevant BGs are invoked prior to the Transfer Date and the existing margin money securing such Relevant BGs is utilised to adjust against the invoked amount, will the Resolution Applicant still pay the difference between INR 103.39 Crores and such utilised margin money on the Transfer Date to make payments as envisaged under the Resolution Plan? (iv)Please clarify the treatment of the Exclusive Marin Money (as defined in the RFRP) proposed under the Resolution Plan which is required to be provided as per clause 3.4(x)(A) & (C) of the RFRP? (v)Whether the release of the margin money is being sought before arranging for infusion of the fresh margin money for the Relevant BGs? Please clarify that the replacement of the bank guarantees will be undertaken in a manner which does not leave the issuing bank's exposure unsecured for any moment prior to, on or after the Transfer Date for the following categories ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Applicant is offering a value lower than INR 240 Cr (i.e. INR 240 Cr discounted to a lower value), if the option to obtain the value upfront is exercised. 7.We note that Clause 6.4.8 states that Monitoring Committee (MC) will pay costs incurred during the monitoring period as and when they fall due during the monitoring period. Please clarify that this is subject to Clause 6.2.7. 8.In Clause 6.4.9, all dues relating to employees are sought to be extinguished. Gratuity of continuing employees which may fall due after takeover, but relate to prior period, cannot be extinguished. Please clarify that gratuity and other similar obligations that fall after the Insolvency commencement date shall not be extinguished. 9.We note that Clause 7.3.2 stipulates that the RP shall inform of expiring licenses to the Resolution Applicant on transfer date. Please-clarify that such responsibility will be that of the Monitoring Committee, of which the Resolution Applicant will be a part. 10.In Clause 9.2.6, please clarify that the Monitoring Committee will be bound to take actions on a reasonable effort's basis, as provided in Clause 9.2.1 11.Clause 12.3 states that if any court sets as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.13 to 6.3.16 are under the heading "Bank Guarantee" issued by various Banks as listed in Annexure 3. Clause 6.3.13 to 6.3.15 of Resolution Plan are as follows: "Bank Guarantees: 6.3.13. The Resolution Applicant understands that there is bank guarantees issued by various banks as listed in Annexure 3 (such bank guarantees, the "BGs"). All BGS are secured against 100% Margin Money. 6.3.14. The Margin Money of INR 180.05 Crores provided against the BGs will be returned by the relevant issuing bank to the Corporate Debtor on the Transfer Date and utilized for making payment to the Secured Financial Creditors or in the manner decided by the CoC. It is clarified that in the event any BG is returned prior to the Transfer Date, the Margin Money provided against such BGs shall be returned by the relevant issuing bank to the account of the Corporate Debtor prior to the Transfer Date for purposes of payment to the Secured Financial Creditors or to creditors as decided by the CoC, on the Transfer Date 6.3.15.In order to maintain the going concern status of the Corporate Debtor and secure the continuity of the BGs, the Resolution Applicant shall provide 100% margin money to the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the underlying liabilities of the Corporate Debtor towards the beneficiaries (for which Remaining BGs have been given) would be extinguished under the Resolution Plan, such BGs will not be continued. We clarify that the corresponding Margin Money (of INR 76.61 crs.) is therefore also sought to be returned to the Corporate Debtor for further payment to the Secured Financial Creditors as per the Resolution Plan. However, to provide assurance to the issuing banks, we clarify that all BGs listed in Annexure 3 will be always secured by 100% Margin Money. Therefore, pending the cancellation, expiry, release of BGs listed in point 6 and 7 of Annexure 3, we will be providing replacement Margin Money to the issuing banks on the Transfer Date. If any of the BGs listed in point 6 and 7 of Annexure 3 are invoked prior to the Transfer Date then the equivalent Margin Money of such invoked BGs shall be paid by the Resolution Applicant which shall be utilised to make payment to the Secured Financial Creditors or in the manner as decided by the CoC, on the Transfer Date. In case any of the BGs listed in point 6 and 7 of Annexure 3 are live or uninvoked as on the Transfer Date, the Reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Plan continuation of certain Bank Guarantees listed in Annexure 3 (except BGs listed in point 6 and 7), which was proposed for replacement of the margin money with respect to such BGs., the Sarda mentioned that "in respect of BGs listed in point 6 and 7 of Annexure 3, since the underlying liabilities of the Corporate Debtor towards the beneficiaries would be extinguished under the Resolution Plan, such BGs will not be continued". The response by email dated 10.05.2023 is extracted above in paragraph 49. Further, it was clarified that corresponding margin money of INR 76.71 crores, is therefore, also sought to be returned to the Corporate Debtor for further payment to the secured Financial Creditor as per the Resolution Plan. Thus, clarification issued by Sarda clearly reiterated its commitment of replacement of total Bank Guarantees amounting to INR 180.05 crores, which amount was to be returned to the Financial Creditor, which was to be utilized for payment to secured Financial Creditors. In the email, which was sent by the RP on 08.05.2023, it was clearly mentioned that "the aforesaid clarifications are necessary and important for the complete assessment of the feasib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money provided in relation to such bank guarantees. In this regard; please clarify whether the Resolution Applicant will pay the amount equivalent to the under tying margin money for such Specified Bank Guarantees in the event such bank guarantees are invoked and the margin money is adjusted by the relevant bank/financial institution as provided in clause 11.2.3 of Part B of the Resolution Plan or will the Resolution Applicant pay towards the margin money which is remaining on the Payment Date in' relation to the Specified Bank Guarantees. 2.We note that as per clause 11.3.2 (b)(ii) of Part B of the Resolution Plan, the MPPP Bank Guarantees which are not invoked and extinguished on or before the Payment Date shall be renewed or replaced by the Resolution Applicant/Corporate Debtor as per the terms mutually agreeable between the Resolution Applicant and the bank/financial institution which has issued the MPPP Bank Guarantee. Further, it is provided that the existing underlying margin money in respect of such MPPP Bank Guarantees will be released to the financial creditors in the event of such renewal or replacement. In this regard, please clarify whether the Resolution Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores upfront, the entire commercials were allowed to be changed, which is impermissible as per the Process Note. It is submitted that all Resolution Applicants were required to submit their Resolution Plan in accordance with the financial proposal, which was finalized on 19.04.2023 in the bidding process. It is submitted that by clarification issued on 10.05.2023, Sarda has deviated from its commercial offer, which was frozen and concluded on 19.04.2023. For appreciating the above submission, we need to revert to the email dated 08.05.2023, sent by the RP to the Sarda and relevant clarification sought regarding above aspect. Paragraph 6 of the email dealt with amount of INR 240 crores. Paragraph 6 of the email dated 08.05.2023 by which clarification was asked was to the following effect: "6. Clause 6.3.2.(b), states that Resolution Applicant will pay a "discounted amount of INR 240 Cr" to the CoC, in case CoC wishes to obtain the deferred portion of INR 240 Cr upfront. Please clarify whether Resolution Applicant is offering a value lower than INR 240Cr (i.e. INR 240 Cr discounted to a lower value), if the option to obtain the value upfront is exercised." 54.Clause 6.3.2(b) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and deferred payment, indicate that upfront payment proposed was INR 1553 crores and deferred component consisted of an amount of INR 301.64 crores. An amount of INR 143.37 crores was proposed to be paid at the end of 2nd year and INR 158.27 crores at the end of 3rd year. Total deferred payment offered by Sarda was thus, INR 301.64 crores. Exhibit-A, which is automatically generated because of Appendix-1, indicate that upfront value of deferred payment was INR 120 crores by end of 2nd year and INR 120 crores by the end of 3rd year. Thus, net present value of payment of INR 301.64 crores (deferred) was reflected as INR 240 crores, which was the net present value of the financial offers reflected in the Exhibit-A. The net present value of INR 240 crores of the deferred payment was added in the net present value as well as the financial offers made in the Resolution Plan by the Sarda. In the query dated 08.05.2023, a query was made from the Sarda that whether as per Clause 6.3.2(b), Sarda will pay a "discounted amount of INR 240 crores to the CoC, in case CoC wishes to obtain the deferred portion of INR 240 crores upfront". Answer given by Sarda was "No" and it was clarified that valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1 brought on record along with the affidavit of SRA. We, thus, also do not find any substance in submission of the Appellant(s) that Sarda was allowed to modify its commercial offer in the guise of clarification. The Commercial offer given by Sarda were not changed by clarifying to the queries raised by the RP. 58.As noted above, the above queries was raised by RP for the complete assessment of the feasibility and viability as well as commercial acceptability of each of the Resolution Plans and in the email dated 08.05.2023, the RP himself stated that the said clarification is necessary to enable the CoC and RP to evaluate the Resolution Plan and complete the CIRP in the timelines prescribed under the IBC. The email dated 08.05.2023 further provided that the clarification must be provided by way of addendum to the Resolution Plan submitted on 28.04.2023. It further mentions that "the addendum may contain necessary consequential changes (if any) pursuant to the points raised in your Resolution Plan". It is further relevant to notice that the other Resolution Applicants have also sent the clarification by way of addendum to the Resolution Plan submitted on 28.04.2023 including Sard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.2023, enhancing its offer by INR 50 crores, was rightly not considered by the CoC, which was expressly rejected by 100% vote by CoC in its meeting held on 17.06.2023. After approval of Resolution Plan, no Resolution Applicant is entitled to raise its offer or give any revised offer. 62.Now, we come to the additional submission raised by learned Senior Counsel for Jindal Power that Jindal Power provided for 10% upside equity, which was not included in the financial proposal of the Jindal for voting. We need to notice one aspect about Jindal Power. Jindal Power after approval of Resolution Plan of Sarda, accepted back two EMDs and had not raised any objection before the Adjudicating Authority by filing any Application or objection. When Appeal(s) were filed by Sarda, challenging the order dated 06.10.2023, Jindal also filed an Intervention Application in the earlier round of the Appeal filed by Sarda, which Intervention Application was rejected by this Tribunal by its order dated 10.05.2024. In paragraph 88 of the judgment dated 10.05.2024, following was held: "88. Coming to the IA filed by Jindal Power, we notice that Jindal Power, who had not filed any Application before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is submission that NCLT can interfere if there is perversity or material irregularity. In `Ngaitlang Dhar' (Supra), Insolvency Process commenced in respect of Meghalaya Infratech Ltd., Expression of Interest (`EoI') was invited from Prospective Resolution Applicant. The Appellant, Ngaitlang Dhar, Respondent No. 1 Panna Pragati Infrastructure (P) Ltd. one Mr. Abhishek Agarwal and Mr. Ashish Jaisa saria submitted their EoI. All of them submitted their Resolution Plans. In CoC Meeting held on 11.02.2020 and 12.02.2020, the Appellant Ngaitlang Dhar emerged as H-1 bidder, whereas Mr. Abhishek Agarwal emerged as H-2 bidder. In 7th CoC Meeting, held on 06.03.2020, the CoC, with a 100% voting share, approved the Resolution Plan of the Appellant, Ngaitlang Dhar (H-1 bidder), which was further approved by NCLT on 18.05.2020. The Respondent, PPIPL contended that in the CIRP Proceedings before the CoC held on 11.02.2020 and 12.02.2020, they had sought only one or two days' time to submit its Revised Resolution Plan, which was submitted on 14.02.2020 and I.A. No. 27 of 2020 which was filed by Respondent No. 1, seeking a direction to the RP to take on record its Revised Resolution Plan, date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Keshardeo Chamria v. Radha Kissen Chamria [Keshardeo Chamria v. Radha Kissen Chamria, (1952) 2 SCC 329: 1953 SCR 136] while considering the scope of the words "material irregularity", as are found in Section 115 of the Civil Procedure Code, 1908: (SCC para 26) "26. Reference may also be made to the observations of Bose, J. in his order of reference in Narayan Sonaji Sagne v. Sheshrao Vithoba [Narayan Sonaji Sagne v. Sheshrao Vithoba, 1947 SCC OnLine MP 21: AIR 1948 Nag 258] wherein it was said that the words "illegally" and "material irregularity" do not cover either error of fact or law. They do not refer to the decision arrived at but to the way it is reached. The errors contemplated relate to material defects of procedure and not to errors of either law or fact after the formalities which the law prescribes have been complied with." 35. In the present case, leave apart, there being any "material irregularity", there has been no "irregularity" at all in the process adopted by the RP as well as the CoC. On the contrary, if the CoC would have permitted the Ppipl to participate in the process, despite it assuring the other three prospective resolution applicants in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice another Judgment of the Hon'ble Supreme Court in the matter of `Vallal RCK' Vs. `Siva Industries & Holdings Ltd.', reported in (2022) 9 SCC 803, where Hon'ble Supreme Court had held that there is an intrinsic assumption, that Financial Creditors are fully informed about the viability of the Corporate Debtor and feasibility of the proposed Resolution Plan. We may refer to Paragraphs 21 & 22, which are as follows: "21. This Court has consistently held that the commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the IBC. It has been held that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act based on thorough examination of the proposed resolution plan and assessment made by their team of experts. A reference in this respect could be made to the judgments of this Court in K. Sashidhar v. Indian Overseas Bank [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150: (2019) 4 SCC (Civ) 222] Essar Steel India Ltd. Committee of Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cases referred therein, clearly give paramount importance to the decision of the CoC taken in commercial wisdom to approve a Resolution Plan and Hon'ble Supreme Court has outlined the limited jurisdiction of NCLT and NCLAT to interfere with the said decision of the CoC. 73.Learned Counsel for the Appellant has also relied on one Judgment of the Hon'ble Supreme Court in the matter of `Ajay Gupta' Vs. `Pramod Kumar Sharma', reported in (2022) 6 SCC 86, which was a case where in the CIRP Process, on an I.A. 367 of 2021 filed by one of the Resolution Applicants, the Adjudicating Authority granted prayer of Appellant to amend the Resolution Plan dated 22.10.2021 but, at the same time, also allowed the other Resolution Applicant to place any modification in the Resolution Plan before the CoC. The facts have been noticed in Paragraph 2 of the Order, which is as follows: "2. The appellant seeks to question the judgment and order dated 13-1-2022 [Ajay Gupta v. Pramod Kumar Sharma, 2022 SCC OnLine NCLAT 93] as passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi (hereinafter also referred to as "Nclat" or "the Appellate Tribunal") in Company Appeal (AT) Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days. 3.At this point of time, we are conscious of the fact that the CIRP period will come to end on 6- 1-2022 and a decision on the resolution plans will have to be taken first by the CoC and, thereafter by this adjudicating authority. 4.Therefore, the ends of justice will be met if we direct the applicant herein to place the affidavits at pp. 290 to 298 along with the covering letter addressed to the sole member of the CoC for consideration. Since we do not wish to disturb level playing field, the other resolution applicants whose plans are also being considered will also be permitted to place any modification in their submitted resolution plan before the CoC for its consideration. Such modifications shall be communicated to the CoC, no later than 48 hours from now. 5.Accordingly, IA No. 367 of 2021 is disposed of." 75.Subsequently, the Resolution Plan considered by the CoC on 21.12.2021 and the Plan of other Resolution Applicant was approved. Appellant sought to question the Order dated 13.12.2021 before the Appellate Tribunal. Appellate Tribunal however did not find any substance and maintained the Orders as to maintain the level playing field. In Paragraphs 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021 [Bank of India v. B.B. Foods (P) Ltd., 2021 SCC Online NCLT 662] . 13.We do not find the submissions aforesaid making out a case for interference. This is for the simple reason that on a perusal of the order dated 13-12-2021 [Bank of India v. B.B. Foods (P) Ltd., 2021 SCC OnLine NCLT 662] , this much is clear that certain key features/stipulations of the resolution plan were sought to be amended by the appellant. Whether it was done in response to the requirement of the CoC or otherwise, the fact of the matter remains that there was going to be modification of the relevant terms of the resolution plan of the appellant. When that was being permitted at the request of the appellant himself, we cannot find fault in the adjudicating authority having passed an order so as to balance the position of the respective parties and to provide a level playing field by granting corresponding permission to the other resolution applicant to place its modification for consideration of CoC. 14.So far as affidavit dated 17-11-2021 is concerned, though the appellant stated in Para 3 thereof that the payment of upfront amount under the resolution plan was in no way going to modify the plan b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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