9911796707
TMI Blog2024 (10) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... pta Vs. `Pramod Kumar Sharma [ 2022 (6) TMI 387 - SUPREME COURT ] noticed that the above was a case where question of modification of the Resolution Plan was involved hence liberty was granted to other Resolution Applicant to modify its Plan which Order was maintained. In Paragraph 13 as noted above, observation of the Hon ble Supreme Court is this much is clear that certain key features/stipulations of the Resolution Plan were sought to be amended by the Appellant . Thus, the Judgment of the `Ajay Gupta (Supra) was in the background when Appellant sought to amend the Resolution Plan hence the liberty was granted to other Resolution Applicants also to modify its Plan in Paragraph 10. In the present case by email dated 08.05.2023 sent by the RP clarifications was sought from Sarda. It is also noticed that clarifications were also sought form Torrent, Jindal and Vantage seeking clarification of different Clauses of their respective Resolution Plan, which clarifications were sought after the decision of the CoC taken in the CoC Meeting dated 06.05.2023. The clarification asked for by the RP which is already extracted, in no manner permitted the Sarda or any other Resolution Applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lvency resolution process of SKS Power Generation Chhattisgarh Ltd. leading to filing of these Appeal(s) need to be first noticed: (i)On an Application filed by Bank of Baroda under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the IBC ) against the Corporate Debtor - SKS Power Generation Chhattisgarh Ltd., insolvency resolution process was initiated vide order dated 29.04.2022 passed by Adjudicating Authority. (ii)Respondent No.1 Ashish Arjunkumar Rathi, RP published Form-G inviting Expression of Interest ( EoI ) from prospective Resolution Applicants. After receipt of EoI, the RP on 12.08.2022 issued RFRP, Information Memorandum and access to Virtual Data Room. Timeline for submission of Resolution Plan was extended up to 30.12.2022. Seven Resolution Applicants, including the Appellant(s) in these Appeal(s) as well as SEML filed their Resolution Plan. Resolution Applicants were called for discussions and negotiations. Revised Resolution Plans were submitted by all the Appellant(s) as well as SEML. (iii)Committee of Creditors ( CoC ) decided to hold an inter-se bidding process. A Process Note dated 13.04.2023 was issued for inter-se bidding proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan by the CoC of SEML. The Earnest Money Deposits received from the Appellant(s) were refunded by the RP and received back by all the Appellant(s). (ix)The Adjudicating Authority heard IA No.2794 of 2023 on 10.07.2023 and reserved the IA for orders. On Application filed by the RP, period of CIRP was extended from time to time and date of expiry of CIRP was extended unto 24.06.2023, prior to which date, Application for approval of Resolution Plan was filed by the RP. (x)On 01.08.2023, Vantage Point Asset Management Pvt. Ltd. filed an IA No.3336 of 2023 praying for various reliefs. On 03.08.2023, IA No.3399 of 2023 was filed by Torrent Power Ltd. seeking various prayers. On 07.08.2023, IA No.3336 of 2023 and IA No.3399 of 2023 were heard and reserved for orders. (xi)By an order dated 07.08.2023, the Adjudicating Authority also directed the RP to place on record correspondence with Resolution Applicant and minutes of the meeting. In pursuance of the order dated 07.08.2023, the RP filed an affidavit on 20.08.2023. Torrent Power Ltd. and Vantage Point Asset Management Pvt. Ltd. have also filed affidavit in their applications on 06.09.2023 and 04.09.2023 respectively. (xii)The Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by Torrent Pte Ltd. (xvi)Consequent to the order dated 10.05.2024 passed by this Tribunal, the RP, CoC as well as the SRA have filed their replies to the IA No.3336 of 2023; IA No.3399 of 2023 before the Adjudicating Authority. Adjudicating Authority heard all the IAs and vide judgment dated 13.08.2024, dismissed IA No.3336 of 2023 and 3399 of 2023. Intervention Petition Nos.40 of 2024 was dismissed, and Intervention Petition No.41 of 2024 was allowed and disposed of. IA No.2794 of 2023 filed by the RP for approval of Resolution Professional was allowed and Resolution Plan was approved by order dated 13.08.2024. Aggrieved by order dated 13.08.2024, these Appeal(s) have been filed by unsuccessful Resolution Applicants. 3.Before we notice the respective submission of learned Counsel for the parties, we may briefly notice the treatment by Adjudicating Authority of IA No.3336 of 2023, IA No.3399 of 2023, Intervention Petition No.40 of 2024 as well as IA No.2794 of 2023 (Plan approval application). The Adjudicating Authority has made its determination in Part-I, Part-II, Part-III and Part-IV, as noticed in paragraph 7. Paragraphs 7.1 to 7.4 of the order of Adjudicating Authority are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2794 of 2023 till such time as this Application is heard and disposed finally. C)That this Tribunal be pleased to order and direct the RP to supply a copy of Interlocutory Application No. 2794 of 2023 together with the details, particulars and relevant documents about the Resolution Plan approved by the CoC and allow the Applicant to file its affidavit to oppose the Interlocutory Application No. 2794 of 2023. D)In the alternative to Prayer B, that this Tribunal be pleased to permit the Applicant to file Affidavits/pleadings and make submissions at the time of hearing of Interlocutory Application No. 2794 of 2023. E) Pending the hearing and final disposal of this Application, this Hon ble Tribunal be pleased to stay the proceedings in Interlocutory Application No. 2794 of 2023; 5.The Adjudicating Authority in paragraph 9 and thereafter proceeded to notice the submissions made by the Applicant, reply given by the RP as well as the reply given by CoC. Various judgments relied by the parties of the Hon ble Supreme Court as well as of this Tribunal have also been noticed by the Adjudicating Authority. The submission of the Applicant that Resolution Plan should ensure maximization of va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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 all stakeholders including operational creditors has been taken care of. 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 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. {emphasis applied} 6.The enhanced offer, which was communicated by the Applicant - Vantage Point Asset Management Pte. Ltd. as noticed above, offering INR 50 crores more, was also dealt with in paragraph 14.4, in which paragraph Adjudicating Authority has noticed the minutes of the CoC dated 17.06.2023. Paragraph 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant. b. Defer the pronouncement of orders in the Plan Approval Application until the adjudication and disposal of the present Application. c. Grant liberty to the applicant to file its objections in the Plan Approval Application, if any, pursuant to reviewing the Plan Approval Application. d. Keep the Plan Approval Application in abeyance until the applicant has reviewed the Plan Approval application and filed its objections (if any) in the said application. e. Pass such other orders as deemed fit in the interests of justice and equity in the facts and circumstances of the matter. 9.The contentions raised by the Applicant Torrent Power Ltd. have been noticed by the Adjudicating Authority in paragraph 17.1 to 17.4. The reply of the RP has been noticed in paragraph 18.1 to 18.3. SRA s reply has also been noticed in paragraph 19. The principal contention raised on behalf of the Torrent Power Ltd. has been captured in paragraph 21.2 of the order. The Adjudicating Authority in paragraph 21.2 has also extracted paragraphs 82, 85 and 86 of the order of this Tribunal dated 10.05.2024. Paragraph 21.2 is as follows: 21.2. The principal contention of the Applicant in the instant applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court above, clearly indicate that distinction has to be maintained while terming a decision as perverse. A minor infraction of procedural or any other similar reasons are not sufficient to term a decision as perverse. We have already noticed the judgment of the Hon ble Supreme Court in M.K. Rajagopalan (supra), where Hon ble Supreme Court has observed that commercial wisdom of CoC would come into existence and operation only when all the relevant information is available before it and is duly deliberated upon by all its Members. Thus, in event, all relevant materials are available before the CoC, which is deliberated, no perversity can be imputed in the decision . As noted above, the ground to interfere with the approval of Resolution Plan by the CoC by Adjudicating Authority are circumscribed by virtue of Section 31, sub-section (1). Thus, a fault can be found in the decision only when there is serious error in the decision-making process and by which error, the CoC is unable to take its commercial decision. 86.One more submission, which was pressed by learned Counsel for the Torrent Power Limited was that under the email dated 28.01.2023 all Resolution Applicants were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Plan. Paragraph 21.4 of the order of the Adjudicating Authority is as follows: 21.4. Upon a full-bore consideration of Replies filed by CoC, SRA and RP and on the express tenets of the RFRP and Process Note pertaining to the averments raised in this regard, coupled with the Hon ble NCLAT already having made categorical observations to the same effect in para { 82} and { 86 } as afore-extracted; We are of the considered view that the clarification sought by the RP apropos the SRA (and all the other Resolution Applicants, including the Applicant in the instant application ) vide E-Mail(s) dated 08.05.2023, thereby does not constitute discrimination qua the Applicant as clarification was sought from all the resolution applicant(s). Further, we note that on a conjoint reading of the terms of Process Note and RFRP, and more specifically so, considering clauses 9(a) to 9(e) of the Process Note, and clauses { 2.16.7}, { 2.18.5(t)}, {2.9.7(d)}, {4.1.5}, {4.1.8} and {4.1.11 } of RFRP, that these clauses essentially empower the CoC to seek clarification(s) from one/ all resolution applicant(s) and give effect to its commercial wisdom . We have duly perused the afore-mentioned clauses and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o itself powers of a court of equity in this limited regard. In paragraphs 29, 30 and 31, the Adjudicating Authority made following observations: 29. To contextualise further, the scope of inquiry endowed to this Adjudicating Authority is apropos the (complete) financial data to be placed before CoC for it to arrive at a considered view in exercise of its commercial wisdom. The tenets of bank guarantee(s), margin money infusion, and the treatment of equity, which are essentially a stratum of financial data , have been thoroughly examined by the CoC, in its afore- stated discussion. We re-iterate that it is neither open for this Tribunal to venture into probing about the interpretation of such financial data, nor can it assume to itself powers of a court of equity in this limited regard. We further note that the CoC in its 34th meeting has thoroughly gone into various aspects raised leading up to ( and pursuant to ) the ( now set- aside ) NCLT Order and has affirmed on record that it has carried out its due diligence while following Due Process , as set out by the RFRP read in conjunction with Process Note. 30.Upon having factored-in all the relevant materials cited above, and averm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the commercial wisdom of CoC by acting as a court of equity, and that the objectives of the Code warrant due primacy to the commercial and/or business decisions taken in this regard. We are thus not inclined to consider the contention that complete financial data has not been placed before the CoC of the Corporate Debtor in the decision-making process, while approving the resolution plan, in consideration hereto. 13.In Part-IV, the Adjudicating Authority considered the IA 2794 of 2023 filed by the RP for approval of Resolution Plan. In Part-IV, the Adjudicating Authority also delt with Intervention Petition No.40 of 2024, which was filed by Jindal Power Ltd. The Adjudicating Authority noticed that IA filed by Jindal Power Ltd. in Appeal, which was decided by this Tribunal on 10.05.2024 was rejected. Intervention Petition No.40 of 2024 was dismissed by the Adjudicating Authority, after noticing the respective submission of parties. In paragraph 43 of the judgment, following has been held: 43. Upon perusal of materials which form part of the record hereto, and after having heard the parties at length in the instant intervention petition; We are of the shared view that the issues rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Plan, it is observed that the Resolution Plan provides for the following: ii. Payment of CIRP Cost as specified u/s. 30(2)(a) of the Code. iii. Repayment of Debts of Operational Creditors as specified u/s. 30(2)(b) of the Code. iv. For management of the affairs of the Corporate Debtor, after the approval of Resolution Plan, as specified u/s. 30(2)(c) of the Code. v. The implementation and supervision of Resolution Plan by the RP and the CoC as specified u/s. 30(2)(d) of the Code. 53.The Applicant RP has complied with the requirements of the Code in terms of Section 30(2)(a) to 30(2)(f) of IBC, 2016, and Regulations 38(1), 38(1)(a), 38(2)(a), 38(2)(b), 38(2)(c) 38(3) of CIRP Regulations. 54.The Applicant RP has filed the Compliance Certificate in FORM-H along with the plan, vide Affidavit dated 03.07.2023. Upon perusal, the same is found to be in order. The Resolution Plan has been approved by the members of CoC in the 31st Meeting of CoC, which was held on 08.02.2023, with a voting percentage of 100%. 55.On a further perusal, we note that an application u/s. 66 of IBC, 2016 in relation to fraudulent transaction has been filed via I.A. No. 2580 of 2023, and the same is admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (supra). 59.In view of the afore-stated discussions and the law thus settled, the instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38 (1A) and 39 (4) of the Regulations. The Resolution Plan is thus not in contravention with any of the provisions of the Code and is in accordance with law. The same needs to be approved. 15.The Adjudicating Authority allowed IA No.2794 of 2023 and issued consequential directions. IA No.3336 of 2023, IA No.3399 and Intervention Petition No.40 of 2024 were rejected. 16.As noted above, the Appellant(s) are unsuccessful Resolution Applicants, who have come up in these Appeal(s) challenging the impugned order dated 13.08.2024. 17.We have heard Shri Arvind Nayar, Sr. Advocate appearing for the Appellant- Vantage Point Asset Management Pte. Ltd. (Comp. App. (AT) (Ins.) No. 1619 1620 of 2024); Dr. Abhishek Manu Singhvi, Sr. Advocate and Shri Niranj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicants. No applicant was entitled to modify its commercial offer after the conclusion of the negotiation process. The CoC and the Resolution Professional under the guise of seeking clarifications vide e-mail dated 08.05.2024 permitted the SEML to modify the commercial offer with respect to (i) converting deferred amount of INR 240 Crore to upfront offer (ii) increasing the infusion amount of INR 58 Crore towards bank guarantee margin money whereas in the Resolution Plan, SEML has offered only to infuse INR 103.39 Crore as replacement of margin money. Elaborating the submission on above first ground, it is submitted by the Appellant that SEML in Appendix-I had offered INR 240 Crores plus interest as deferred amount of INR 143.37 Crores and INR 158.27 Crores at the end of 2nd and 3rd year which was offered as a deferred payment. In the Resolution Plan submitted post the Negotiation Process, Sarda offered option to CoC to take the discounted amount of INR 240 Crores as upfront payment. It is submitted that in Appendix-I, there was no option of upfront payment of INR 240 Crores which by way of clarification, SEML gave an option to the CoC to take the amount of INR 240 Crores as upfro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o INR 180.49 crores for which Sarda has been assigned separate marks for both these criteria. Thus, the preferential treatment has been meted out to Sarda by the RP/CoC enabling it to leapfrog over the other RAs. A similar opportunity was not provided to Torrent. Thus, the facts of the present case clearly demonstrate the two deviations by Sarda, viz. conversion of deferred amount of INR 240 crores to upfront and increase of infusion towards BGs by INR 76 crores approx. The case squarely falls within the ambit of Section 61(3) of the Insolvency and Bankruptcy Code, 2016 which permits this Tribunal to interfere, since there is material irregularity in the process. 20.Counsel appearing for the Appellant- Vantage Point Asset Management Pte. Ltd. has additional submission that Vantage Point Asset Management Pte. Ltd. has sent an e-mail dated 14.06.2023 to the Resolution Professional that Vantage Point Asset Management Pte. Ltd. is ready to increase its offer by INR 50 Crores and further the Vantage Point Asset Management Pte. Ltd. had given the highest offer in the plan, its Resolution Plan deserves to be approved. It is contended that the object of CIRP is to maximise the value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the Resolution Applicants or any other person to approve a Resolution Plan which has scored the highest as per the Evaluation Criteria and any Resolution Plan shall be approved solely based on the CoC s commercial wisdom. It is submitted that the CoC approves a Resolution Plan in its commercial wisdom by considering a host of factors and the overall feasibility and viability of the Resolution Plan. The Resolution Plan of SEML was approved by 100% majority of the CoC. CoC consist of Bank of Baroda having 92.77% voting share and the State Bank of India having 7.23% voting share. Members of the CoC being leading banks of the country are aware of all financial and are fully competent to evaluate the Resolution Plan and come to a business decision. Thus, the arguments of the Appellants that by guise of clarifications SEML was allowed to change its financial is without any basis. The e-mail dated 08.05.2023 sent by the Resolution Professional raising certain queries and in the reply to the said e-mail on 10.05.2023, SEML itself indicated that there was no modification in the financial proposal submitted by the SRA. Sarda had offered INR 1854.64 Cr. to the secured financial credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Resolution Professional in pursuance of the decision of the CoC held in its meeting dated 06.05.2023 has issued e-mail dated 08.05.2023 to all the Resolution Applicants asking different clarifications with respect to their Resolution Plans. The e-mail clearly contemplates that necessary clarification asked to the queries raised by e-mail be submitted by way of an addendum to the Resolution Plan. Clauses of RFRP specifically empower the CoC/ RP to ask for any clarification from the Resolution Applicants. The clarification from the Resolution Applicants was necessary for completing assessment of feasibility and viability as well as commercial acceptability of each of the Resolution Plan and was for the purpose to bring clarity in the assessment. There was no discrimination practiced against any of the Resolution Applicants since clarification was asked from all Resolution Applicants. All Resolution Applicants also submitted their reply to the query on 10.05.2023. The query, which was asked from the SRA, in no manner permitted the SRA to change its commercial offer which was finalised in Negotiation Process completed in four rounds on 19.04.2023. The reply, which was given by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SRA remain unchanged in its Resolution Plan submitted on 28.04.2023. When the net present value of the SRA remains the same, it is not open for the Appellant to contend that the SRA has changed its financial. The clarification given on 10.05.2023 by the SRA is clarification on the queries asked by the Resolution Professional which also in no manner changed the commercial offer given by the SRA. In the Resolution Plan submitted on 28.04.2024, SRA has clearly mentioned that the discounted amount of INR 240 Crores can be given upfront also at the option of the CoC which amount of INR 240 Crores was net present value of the deferred payment offered by the SRA. It is submitted that the said option was already included in the offer given by the Appellant, when the Resolution Plan was submitted by SRA on 28.04.2023 itself contain the offer to pay upfront of INR 240 Crores on option of the CoC, the foundation of the submission of the Appellant that in the guise of clarification, Appellant has changed its commercial is baseless. Learned Counsel for the SRA stated that SRA has already paid Rs.1900 crores consequent to the approval of the Plan. 27.Coming to margin money of INR 180.05 Crores, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Debtor. It shall be sufficient to notice the pleadings in Company Appeal (AT) (Insolvency) No. 1621 1622 of 2024 (Torrent s Appeal) for deciding all these Appeals. 31.The RFRP dated 12.08.2022 has been filed as Annexure A2 of the Appeal ( Torrent Power Ltd. ). Clause 2.6.2 (d) empowers the CoC to deliberate, discuss and/or negotiate with any one or more Resolution Applicants in any manner deemed fit by the CoC. Clause 2.6.2 (d) is as follows: - d) The Compliant Resolution Plans presented by the Resolution Professional to the CoC shall be considered, evaluated, assessed and approved by the CoC as per the sole discretion of the CoC the CoC has the right to satisfy itself about the credentials and antecedents of the Resolution Applicant(s) and the viability and feasibility of the Resolution Plan(s). The CoC may at its option, prior to or post evaluation, deliberate discuss and/or negotiate with any one or more Resolution Applicants in any manner deemed fit by the CoC. The Prospective Resolution Applicants acknowledge and agree that such right of deliberation, discussion and/ or negotiation in terms of this RFRP is necessary for the maximisation of the value of the Company. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the Resolution Plan and/or make modifications of the Resolution Plan and/or submit a revised Resolution Plan, (h)allow one or more Resolution Applicants to jointly submit a Resolution Plan. (i)call for submission of revised Resolution Plans from the Resolution Applicants who have already submitted Resolutions Plans at any stage of the process; or (j)re-issue invitation for submission of Elo or re-issue request for resolution plans from Resolution Applicants (including any new Resolution Applicants). 34.Clause 2.9.7 reserves the right of the CoC to consult with any Resolution Applicant(s) in order to receive clarifications or further information. Clause 2.9.7 is as follows: - 2.9.7. The Resolution Professional and the CoC reserve the right to: (a)consider offers from other Resolution Applicants, in case for some reason they are unable to approve or continue with the shortlisted Resolution Applicants (even if such applicant is the Successful Resolution Applicant); (b)consult with any Resolution Applicant(s) to receive clarifications or further information. (c)retain any information and/or evidence submitted to the CoC, Resolution Professional or CoC advisors by, on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be advanced by the Appellant. Clause 4 of the RFRP deals with Resolution Plan Evaluation and Approval . Clause 4.1.8 clearly provides that the CoC is under no obligation to any of the Resolution Applicants or any other person to approve a Resolution Plan which has scored the highest as per the Evaluation Criteria and any Resolution Plan shall be approved solely because of the CoC's commercial wisdom. Clause 4.1.8 is as follows: - 4.1.8. Subject to such final Resolution Plan of the Resolution Applicant being a Compliant Resolution Plan, the CoC may vote on one or more of the Resolution Plan to approve and/or reject such Resolution Plans. It is made abundantly clear that the CoC is under no obligation to any of the Resolution Applicants or any other person to approve a Resolution Plan which has scored the highest as per the Evaluation Criteria and any Resolution Plan shall be approved solely on the bas i s o f the Co C' s commercial wisdom. 38.We also need to notice the Process Note issued on 13.04.2023 for conducting Negotiation Process on 19.04.2023. On the basis of Negotiation Process, Resolution Plans were required to be filed by all Resolution Applicants. Clause 9 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards payment of the CIRP Cost which is lower than INR 190 Crores, then the gap between INR 190 Crores and such allocated amount shall be deducted from the Upfront Cash Recovery being offered by such Resolution Applicant for the purpose of ascertaining the upfront payment to the financial creditors 39.Annexure to Process Note contains the Tentative Schedule for the Negotiation Process . Step 6 of the Schedule on which reliance has been placed by the Appellant provides as follows: - Step 6 Post the Closure of the Negotiation Process, each Resolution Applicant will be required to submit a draft of its Resolution Plan, incorporating the last Appendix i submitted by such Resolution Applicant (either in the last round or in the previous round, as the case may be) during the Negotiation Process along with any clarification that may have been sought by the RP or the CoC and their respective advisors within a period of 48 hours from the Closure of the Negotiation Process. Upon verification of the said draft by the RP, the Cot and/or their respective advisors, each Resolution Applicant shall submit the signed resolution plan to the RP on such date as may be communicated by the RP (pursuant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nconditionally accepted all the terms and conditions of the Negotiation Process and that it has clearly understood the effect and implication of the Process Note including it rationale, reasonableness and fairness of the terms and proposed timeline and steps thereto. 44.From the above Clause of Appendix 9(e), as well as the relevant Clauses of RFRP and Process Note as extracted above, it is clear that mere fact that Vantage has given offer, which was highest (INR 1815.04 crores) and Torrent second highest (INR 1810 crores) and Sarda, third highest (INR 1805 crores) could not be the reason, which obliged the CoC to approve the Resolution Plan of Vantage and Torrent, as CoC in its commercial wisdom by taking into consideration other relevant factors was entitled to take its business decision. 45.Two principal submissions pressed by learned Senior Counsel for the Appellant(s) in the present Appeal(s), alleging deviation by SRA from its Resolution Plan needs to be dealt upon. The submission of the Appellant as noticed above is that in guise of clarification asked by the RP vide email dated 08.05.2023 to the SRA, the SRA was given an opportunity to modify its commercial offer, which opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary clarifications to the points attached in this email, to enable a comprehensive evaluation of the Resolution Plan. Clarifications sought 1.We note that under clause 6.3.14 of the Resolution Plan, the Resolution Applicant has provided that the margin money of INR 180.05 crore provided against bank guarantees will be returned by the relevant issuing bank to the Corporate Debtor on the Transfer Dale and utilised for payment to the Secured Financial Creditors or in the manner decided by the CoC. Further, as per clause 6.3.15 of the Resolution Plan, the Resolution Applicant has undertaken to infuse INR 103.39 crore as part of Initial Infusion Amount for utilising towards providing 100% margin money for the Relevant BGs (as defined in the Resolution Plan). The Margin Money Replacement Amount (as defined in the Resolution Plan) is proposed to be utilised for replacement / renewal / securing of the Relevant BGs. It is further clarified in the Resolution Plan that in the event any Relevant BG is encashed and paid out to the beneficiary by the relevant issuing bank, then Margin Money Replacement Amount corresponding to such encashment shall be utilised for making payment to the Secured F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by the Corporate Debtor after the Insolvency Commencement Date shall not be construed as part of the Surplus Cash. Further, the Litigation Recovery is proposed to be paid after the Transfer Date as per Clause 6.3.4(d) Accordingly, please clarify whether the Litigation Recovery is also included within Clause 6.5 12. 4.Clause 6.3.5 (j) of the Resolution Plan stipulates that the treatment in relation to Avoidance Benefits shall come into effect only when the RA is provided with a copy of the pleadings filed by the RP in relation to the Avoidance Transaction Litigations and that RA has reserved the right (in consultation with the CoC), to retain the Avoidance Benefits for the benefit of the Corporate Debtor (and not for Secured Financial Creditors) if in its reasonable opinion the Avoidance Benefits are necessary for operations of the Corporate Debtor. This is inconsistent with Clause 6 3 5(a). In this regard, as also informed earlier, the pleadings in relation to Avoidance Transaction litigation were already made available in the Data Room to all the resolution applicant [VDR Ref. No. 12_ CIRP/Avoidance Application and 13_ Additional Data/ Additional Data _ 27 April 2023/ Avoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no later than 11:59 p.m. IST of the 9th day of May 2023 by way of an email to [email protected], to enable the CoC and the RP to evaluate the Resolution Plan and complete the CIRP within the timelines prescribed under the Insolvency and Bankruptcy Code, 2016 (Code). Please note that the clarifications must be provided by way of an addendum to the Resolution Plan submitted by you on April 28, 2023. The addendum may contain necessary consequential changes (if any) pursuant to the points raised on your Resolution Plan. The aforesaid clarifications are necessary and important for the complete assessment of the feasibility and viability as well as commercial acceptability of each of the resolution plans and to bring about clarity and uniformity in the assessment to the resolution plans to arrive at a considered decision in acceptance with the provisions of the Code and the regulations thereunder. This communication has been issued without prejudice to the rights of the CoC and the Resolution Professional to undertake all actions permissible under law and the RFRP to achieve the objectives of the Code. 47.In paragraph-1 of the email, clarification was asked from the Sarda regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Relevant BG is encashed and paid out to the beneficiary by the relevant issuing bank, the Margin Money Replacement Amount corresponding to such encashment shall be utilised for making payment to the Secured Financial Creditors or to creditors as decided by the CoC. on the Transfer Date. 48.Paragraph 6.3.13 refers to Annexure-3, which contains the detail of Bank Guarantees from Serial Nos. 1 to 7. Annexure 3 is as follows: ANNEXURE 3 : BANK GUARANTEES (as on 28 FEBRUARY 2023) S No. Name of the Beneficiary Amounts (in Crores) Remarks 1. Power Grid Corporation of India Limited 37.50 A claim has been filed by PGCIL for this amount which has been duly admitted by the RP. 2. Southeastern Coal fields Limited 36.33 This was provided under the Cost Supply Agreement. 3. Ajmer Vidyut Vitran Nigam Limited (Rajasthan PPA) 8.14 Issued to Rajasthan Discom 4. Jaipur Vidyut Vitran Nigam Limited (Rajasthan PPA) 12.08 Issued to Rajasthan Discom 5. Jaipur Vidyut Vitran Nigam Limited (Rajasthan PPA) 9.78 Issued to Rajasthan Discom 6. Excise Department 69.77 Issued to Rajasthan Discom 7. Customs 6.89 Total 180.05 49.We may now notice the reply to the queries as given by the Sarda to the RP. Sarda in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of the RFRP. The aforesaid clarification and rectification of calculation errors are provided in the Addendum to the Resolution Plan. 50.We now need to test the challenge raised by the Appellant(s) on the queries dated 08.05.2023 and reply dated 10.05.2023 that by way of reply, Sarda was allowed to modify its financial proposal and Sarda, who initially provided for giving margin money of INR 103 crores has now by its reply has changed its offer from INR 103.83 crores to INR 180.49 crores. We need to first revert to the Clause 6.3.14 of the Resolution Plan submitted by Sarda. From the first sentence of Clause 6.3.14, which provides for margin money of INR 180.05 crores, it is stated that 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. Reading the aforesaid paragraph of Resolution Plan with the query dated 08.05.2023, where paragraph 1 of the query in email of the RP stated that We note that under clause 6.3.14 of the Resolution Plan, the Resolution Applicant has provided that the margin money of INR 180.05 crore provided against b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Sarda on 10.05.2023, it is clear that Sarda has not modified its commitment with regard to replacement of BGs as was reflected in the Resolution Plan and clarification, which was basically asked with regard to BGs at Item No.6 and 7, were replied and answered reiterating the commitment of Resolution Applicant that corresponding margin money of INR 76.61 crores with respect to BGs in respect of Item Nos.6 and 7 shall also be returned to the Corporate Debtor for further payment to secured Financial Creditors as per the Resolution Plan. We thus do not find any substance in submission of learned Counsel for the Appellant(s) that Resolution Plan of Sarda only had provided for return of the BGs of INR 103.39 crores and by clarification, the Sarda has changed its offer of entire BG to INR 180.05 crores. The Resolution Plan cannot be read to mean that Resolution Applicant has only provided for replacement of BG of INR 103 crores. Query about Clause 6.3.15 was answered by Sarda clarifying the doubt, which was raised by the RP. It is also relevant to notice that the RP on 08.05.2023 has also sent the queries to other Resolution Applicants, asking them to clarify certain aspect of their res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Torrent and similar clarification was also sought from the Sarda regarding Bank Guarantees. We do not find any substance in submission that by way of clarification, only Sarda was shown any favour or given an opportunity to change its Resolution Plan. 52.We can also not be unmindful of the fact that CoC consists of lead Bankers of the country, Bank of Baroda and State Bank of India, who are assisted by financial experts and advisors and are aware of the contents of the financials of the Resolution Plan of all the Resolution Applicants and are aware of the financial implications of the Plan. As noted above, the CoC and RP are fully empowered to ask for any clarification from any or all Resolution Applicants as per the RFRP and RP has issued the email dated 08.05.2023 under the direction and decision of the CoC. Hence, it cannot be said that any irregularity was committed by RP in issuing the queries to the Resolution Applicants. We, thus, are not persuaded to accept the submission that above is an irregularity within the meaning of Section 61, sub-section (3) (ii), making any ground for interference. 53.Now, we come to the second limb of attack by the Appellant(s) on the approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Resolution Applicant shall pay a discounted amount of INR 240 Crore to the Secured Financial Creditors on the Transfer Date, in lieu of the Deferred Amount ( Deferred Amount Compensation ), The CoC shall inform the Resolution Applicant regarding its decision to subscribe to the NCDs or opt for discounted payment in lieu of the Deferred Amount to the Resolution Applicant in the Lol to be issued to the Resolution Applicant upon approval of its Resolution Plan. It is clarified that in case the CoC decides to take the Deferred Amount Compensation, no NCDs shall be issued, and no Interest on the Deferred Amount shall be payable to the Secured Financial Creditors: 55.The reply given by Sarda on 10.05.2023 to the above email, has been filed by the Sarda along with its affidavit. The reply of Sarda about query No.6, is as follows: . 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 240 Cr (i.e. INR 240 Cr discounted to a lower value), if the option to obtain the value upfront is ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Appellant(s) that Sarda was allowed to change its deferred payment of INR 240 crores as upfront payment is not as per the Clauses of Resolution Plan and the reply given by Sarda. The submission of the Appellant(s) cannot be accepted that in guise of clarification, Sarda has modified its financial offers and has deviated from the offer, which was made in the Resolution Plan. The Resolution Plan, Appendix-1 as noted above clearly mentioned that upfront payment offered is INR 1553 crores and deferred payment was INR 301 crores (net present value was INR 240 crores), for which an option was given to CoC. From the Clauses of Resolution Plan, the CoC was under the impression that Sarda was offering discounted value of INR 240 crores, which was clarified by Sarda that if CoC opt for the said amount upfront, which was clarified by the Sarda that there will be no discounting in INR 240 crores, since INR 240 crores itself is a discounted value of deferred payment of INR 301.64 crores. 57.We, thus, reject the submission of the Appellant(s) that the amount offered by Sarda which was to be paid as deferred payment has been permitted to be paid as upfront in guise of clarification. The de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As observed above, neither the queries raised by RP, nor reply given by Sarda can be said to any opportunity or permission to change the commercial offers by the SRA. The above submissions advanced by the Appellant(s) are without any substance. 59.There are two additional submissions, which have been advanced by the Vantage, Jindal and Torrent which also need to be noted. The learned Senior Counsel appearing for the Vantage submits that Vantage has given the highest offer of INR 1815.04 crores. Hence, to fulfill the objective of IBC and to maximize the value of assets of the Corporate Debtor, the Resolution Plan submitted by Vantage needs approval and CoC has acted arbitrarily in not considering the highest commercial offer made by the Vantage. 60.We have already noticed that the facts that Vantage has given highest offer, under the RFRP and the Process Note, it was clearly mentioned that the mere fact that Resolution Applicant has given the highest offer, the CoC is not obliged to approve its Resolution Plan, which has the highest value as per the identified criteria. Clause-9(e) of the Process Note, clearly incorporate the undertaking given by all Resolution Applicants. When the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e equity, which is offered by Resolution Applicant, can be added into upfront payment. Upside equity is part of evaluation matrix and marking is provided in evaluation matrix based on upside equity offered by a Resolution Applicant. The RP as well as CoC are aware of all Resolution Plan of each Resolution Applicants, including the evaluation matrix, under which the Resolution Plans are to be evaluated. The submission of the Appellant that 10% upside equity offer by it ought to have been included in its upfront payment, in which event its financials could have increased to INR 2130.10 crores, cannot be accepted. In any view of the matter, all financial offers given by Applicant, in Resolution Plan along with evaluation matrix of Resolution Applicant, comes within the domain of business decision of CoC and Resolution Plan of the Applicant Jindal Power Ltd. was evaluated, considered, deliberated and voted by the CoC. Jindal Power cannot be allowed to question the commercial decision of CoC on the ground that 10% upside equity offered by it ought to have been added in its upfront payment. We do not find any substance in the submission of Jindal Power to interfere with the decision of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing was held: 28 . It could thus be seen that the RP as well as the CoC had acted in a totally transparent manner. An equal opportunity was accorded to all the prospective resolution applicants. However, Respondent 1 Plip, without improving his bid amount, went on insisting for more time, which request was specifically rejected by the CoC. 29 . Shri Abhijeet Sinha, learned counsel, fairly concedes that though the final decision of the CoC would not be challenged on the ground that the commercial wisdom of the CoC should not be interfered with, it is only the process of decision- making, which can be challenged if there is any material irregularity in the said proceedings. 33 . No doubt that, under Section 61(3)(ii) IBC, an appeal would be tenable if there has been material irregularity in exercise of the powers by the RP during the corporate insolvency resolution period. However, as discussed hereinabove, we do not find any material irregularity. 67.There can be no quarrel to the proposition laid down by the Hon ble Supreme Court in the above. The argument was accepted by the Hon ble Supreme Court that decision making process can be challenged there being material irregularity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that commercial wisdom of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the processes within the timelines prescribed by IBC. It has been consistently held that it is not open to the adjudicating authority (NCLT) or the appellate authority (Nclat) to take into consideration any other factor other than the one specified in Section 30(2) or Section 61(3) IBC. It has been held that the opinion expressed by the CoC after due deliberations in the meetings through voting, as per voting shares, is the collective business decision and that the decision of the CoC's commercial wisdom is non-justiciable, except on limited grounds as are available for challenge under Section 30(2) or Section 61(3) IBC. This position of law has been consistently reiterated in a catena of judgments of this Court, including: (i)K. Sashidhar v. Indian Overseas Bank [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150: (2019) 4 SCC (Civ) 222], (ii)Essar Steel India Ltd. (CoC) v. Satish Kumar Gupta [Essar Steel India Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531: (2021) 2 SCC (Civ) 443], (iii)Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh [Mah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CoC while granting its approval to the resolution plan. 71.Hon ble Supreme Court further emphasised the need for minimal judicial interference by the NLCT and NCLAT in the framework of IBC. Referring to the Judgment in the matter of ` Arun Kumar Jagatramka Vs. `Jindal Steel Power Ltd. reported in (2021) 7 SCC 474 , following observations were made in Paragraph 27: 27 . This Court has, time and again, emphasised the need for minimal judicial interference by Nclat and NCLT in the framework of IBC. We may refer to the recent observation of this Court made in Arun Kumar Jagatramka v. Jindal Steel Power Ltd. [Arun Kumar Jagatramka v. Jindal Steel Power Ltd., (2021) 7 SCC 474]: (SCC p. 533, para 95) 95. However, we do take this opportunity to offer a note of caution for NCLT and Nclat, functioning as the adjudicatory authority and appellate authority under the IBC respectively, from judicially interfering in the framework envisaged under the IBC. As we have noted earlier in the judgment, the IBC was introduced to overhaul the insolvency and bankruptcy regime in India. As such, it is a carefully considered and well thought out piece of legislation which sought to shed away the prac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Applicant, and pointed out certain defects after the deliberation, Appellant sent a communication letter dated 18.11.2021 where the Appellant put forth his gestures of making the payment upfront if the Bank allowing the same within 90 days of the receipt of the Order of NCLT approving the Resolution Plan, which request was declined by the RP thereafter the I.A.367/2021 was filed by the Appellant which prayer was allowed but, at the time of granting the prayer of the Appellant, Adjudicating Authority allowed the other Resolution Applicant to place any modification in their submitted Resolution Plan before the CoC so as to provide a level playing field. Order passed by the Adjudicating Authority has been noticed in Paragraph 6 of the Judgment which is as follows: 6 . The order dated 13-12-2021 [Bank of India v. B.B. Foods (P) Ltd., 2021 SCC OnLine NCLT 662] so passed by the adjudicating authority reads as under: (B.B. Foods case [Bank of India v. B.B. Foods (P) Ltd., 2021 SCC OnLine NCLT 662] , SCC on-line NCLT paras 1-5) IA No. 367 of 2021 1.The learned counsel for the applicant present. The learned counsel for the CoC present. The learned counsel for the RP present. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Hon ble Supreme Court in the aforesaid Civil Appeal filed by the Ajay Gupta. The arguments raised before the Hon ble Supreme Court was that there was no justification for the Adjudicating Authority granting liberty to the other Resolution Applicant to modify its Resolution Plan, which argument was noticed in Paragraph 12 of the Judgment and rejected. It is useful to extract Paragraphs 12, 13 14 which are as follows: 12 . The learned Senior Counsel for the appellant has painstakingly taken us through the relevant contents of the request for resolution plan ( RFRP for short) as issued by the resolution professional as also the minutes of the meeting of CoC and the affidavit filed by the appellant. The learned counsel would strenuously contend that so far as the appellant is concerned, it had not been a case of modification of the resolution plan because modification as such was not even permissible under the conditions of RFRP; and the submissions of the appellant by way of the affidavit dated 17-11- 2021 had only been to meet with the requirements of the CoC, as reflected in the minutes of the meeting dated 2-11-2021 and for such a proposition, there was no justification in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t grant any opportunity to Sarda to modify or amend the terms of the Resolution Plan. Hon ble Supreme Court in the said Judgment noticed that the above was a case where question of modification of the Resolution Plan was involved hence liberty was granted to other Resolution Applicant to modify its Plan which Order was maintained. In Paragraph 13 as noted above, observation of the Hon ble Supreme Court is this much is clear that certain key features/stipulations of the Resolution Plan were sought to be amended by the Appellant . Thus, the Judgment of the ` Ajay Gupta (Supra) was in the background when Appellant sought to amend the Resolution Plan hence the liberty was granted to other Resolution Applicants also to modify its Plan in Paragraph 10. 79.As noted above, in the present case by email dated 08.05.2023 sent by the RP clarifications was sought from Sarda. We have also noticed above that clarifications were also sought form Torrent, Jindal and Vantage seeking clarification of different Clauses of their respective Resolution Plan, which clarifications were sought after the decision of the CoC taken in the CoC Meeting dated 06.05.2023. The clarification asked for by the RP whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
