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TMI Blog2025 (2) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... after taking into account the feasibility and viability of the Resolution Plan. The Ld. NCLT also does not have any jurisdiction to specifically direct and/or impose a condition for the distribution of an amount that may be received and/or recoverable by Corporate Debtor amongst the creditors while approving the Resolution Plan - The modification made to the resolution plan are set aside, and hence these three appeals are thus allowed. Locus of Appellant, being the dissenting financial creditor of the Corporate Debtor to challenge the Resolution Plan - HELD THAT:- The Appellant, being the dissenting financial creditor of the Corporate Debtor, does not have the requisite locus to challenge the Resolution Plan as duly approved by the members of the CoC. In DBS Bank Ltd. v. Ruchi Soya Industries Ltd. [2024 (1) TMI 186 - SUPREME COURT], wherein the Hon'ble Supreme Court categorically held a dissenting financial creditor does not have any say when the Resolution Plan has been approved by a two-third majority of the CoC and a dissenting financial creditor can only object to the distribution of the proceeds under the Resolution Plan, when the proceeds are less than what the dissenting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the resolution plan, stood modified by the Ld. Adjudicating Authority and thus acted beyond its jurisdiction. The said relevant para of the resolution plan are as under : - "19. l That pursuant to the approval or the Resolution Plan. if any property' or asset or the Corporate Debtor is acquired in accordance with law by either the State Govenm1ent, Central Government, or any statutory authority, then the compensation received in respect of such acquisition will solely accrue to the Corporate Debtor (managed by the Resolution Applicant). It is clarified that no creditor (financial, operational or any other creditor) will have any right on the said compensation (by whatever name called). 44. TREATMENT OF AVOIDANCE TRANSACTION UNDER CHAPTER-II That from the Effective Date the Resolution Applicant will take necessary steps for irnpleadment of itself as the applicant in respect of all avoidance transactions filed by the Resolution Professional during the CIRP. That any proceeds arising out from the favourable decision in the matter of any avoidance transaction shall be split proportionately between the Resolution Applicant and the unsecured financial creditors, in proportio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred parts of the Plan Approval Order have also been impugned by the Appellant by way of Company Appeal (AT) (Ins.) No. 1384 of 2024. 8. Now the Impugned Order, to the extent it imposes the Modification, is erroneous and contrary to settled principles of law as the Ld. NCLT has failed to consider that Clause 19(l) of the Resolution Plan specifically provides for the same and states, "...pursuant to the approval of the Resolution Plan, if any property or asset of the Corporate Debtor is acquired in accordance with law by either the State Government, Central Government, or any statutory authority, then the compensation received in respect of such acquisition will solely accrue to the Corporate Debtor (managed by the Resolution Applicant). It is clarified that no creditor (financial, operational or any other creditor) will have any right on the said compensation...". 9. Thus even if we assume the said event of the purported acquisition of the Corporate Debtor's land has already taken place, any compensation that may be received in the future from the said event of acquisition shall continue to vest with the Corporate Debtor as the same would constitute 'receivables' of the Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to consider the said modification amounts to a material alteration of the terms of the Resolution Plan and goes against the commercial risk assumed by the Appellant (the Successful Resolution Applicant) and the commercial wisdom of the CoC, which is impermissible in law. 14. It is trite law that approval of a resolution plan is exclusively in the domain of the commercial wisdom of the CoC and the extent of judicial review is limited by the provisions outlined in Section 31 of the Code, concerning the Ld. NCLT's approval of a Resolution Plan. The limited judicial review available to the Ld. NCLT, in terms of Section 31 of the Code, lies within the four corners of Section 30(2) of the Code. 15. The Ld. Adjudicating Authority under sub-section (2) of Section 31 of the Code, can reject the Resolution Plan, if the same is not in conformity with the requirements as referred to in sub-section (1) of Section 31 of the Code. However, there is no provision for making an alteration or modification in the Resolution Plan approved by the CoC. In other words, the Adjudicating Authority, of its own accord, cannot make any modification to the resolution plan. 16. The powers of the Ld NCLT wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal. 19. Therefore, in view of the above, the Adjudicating Authority has no jurisdiction to enter into the commercial aspects of the resolution plan and to interfere with the wisdom of the CoC. It is a settled law the Adjudicating Authority cannot sit in appeal with respect to financial implications as considered by the CoC. 20. In view of the above-mentioned facts and legal position, the modification made to the resolution plan are set aside, and hence these three appeals are thus allowed. Company Appeal (AT)(Ins) No. 1596 and 1597 of 2024 21. The Company Appeal (AT)(Ins) No.1596 and 1597 of 2024 challenges the orders dated 04.06.2024 passed in IA No.30/2023 and IA No.568/2023, relating to the approval of Resolution Plan. 22. The contentions as raised by the Learned counsel for the Appellant in these appeals are as follows:- a) The Resolution Plan of the SRA is nothing more than a real estate transaction as the Corporate Debtor's land is in the process of land acquisition whereby compensation of more than 10 Crores shall accrue to the Corporate Debtor. It is further alleged the resolution plan value is lesser than the liquidation value of the Corporate Debtor as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any part of the Corporate Debtor's land has been issued by any appropriate state instrumentality or is placed on record and even the Resolution Professional, in the 10th CoC meeting dated 13.10.2023 has stated no land acquisition notification has ever been published by the appropriate authorities for the purpose of the alleged acquisition of the Corporate Debtor's land and further any future purported compensation that may accrue to the Corporate Debtor has been accounted for in the instant Resolution Plan submitted by the Respondent. Clause 19(l) of the Resolution Plan duly accounts/provides for the said contingency of any future acquisition of the land of the Corporate Debtor. Now it cannot be expected from a Resolution Applicant to account for all future contingencies into the Resolution Plan, especially since the Appellant has failed to produce any concrete evidence to support the existence of the alleged acquisition. Furthermore, if the said land is to be acquired in the prospective future, the said contingency cannot be taken into account on the date of the submission of the Resolution Plan, as the same is based on the information provided under the Information Memorandum it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articipant in all key decisions taken in the insolvency proceedings in the instant case. It is matter of record the Appellant has never raised any such objections in any of the CoC meetings. It is clear the same is being raised at such a belated stage, as a mere afterthought, by the Appellant to maliciously derail the instant insolvency proceedings. Now the Ld. Adjudicating Authority, by way of the Impugned Order has duly recorded the fact the valuation of the Corporate Debtor carried out by the registered valuers is in compliance with the provisions of the Code. Furthermore, by way of the Impugned Order and the Plan Approval Order dated 04.06.2024 in I.A. No. 568 of 2023, the Ld. NCLT has held the Resolution Plan is in compliance with Section 30(1), Section 30(2) and Section 31 of the Code as well as Regulations 37, 38 and 39 of the Regulations. 25. Coming to contention (c) we find Clause 44 of the Resolution Plan provides for the treatment of the said pending PUFE applications. The same provides any proceeds arising out from any favorable decision in the matter of any avoidance transaction shall be split proportionately between the Resolution Applicant and the unsecured financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Guarantee of Rs. 3,60,00,000/- directly with Resolution Plan in order to gain the confidence of the CoC The Authorized Representative of the Respondent specifically sought confirmation of the fact the said action was not violative of the RFRP. Even otherwise, the EMD amounting to Rs. 10,00,000/- was for the purpose of gauging the seriousness of the SRA and the said object was duly fulfilled by the PBG deposited by the Respondent. Therefore, there is no material breach of Clause 1.8.1 of the RFRP, as alleged by the Appellant The Appellant has also alleged the PBG is in violation of Clause 1.9 as the same has been issued by an associate entity i.e., M/s Pioneer Project, in which the sole proprietor of the Resolution Applicant is a partner. However, we find there is no breach of Clause 1.9 of the RFRP as, inter alia, Clause 1.9.4 of the RFRP itself provides for the payment of the PBG by a Parent Company. The Respondent vide its email dated 02.09.2023 to the RP, clarified the said concerns regarding the PBG. Despite ample opportunity, the Appellant failed to raise any objection qua the PBG at that point of time 27. Qua contention (d) we note the Appellant, being dissatisfied w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CoC meetings, cannot be permitted to raise this objection at this stage, especially when the revised Resolution Plan and the Addendum thereof were submitted at the instance of the suggestions put forth by the members of the CoC. including the Appellant. 29. Lastly qua contention (g) we find the Respondent has given due treatment to the Appellant in the Resolution Plan, as mandated by the Code. Now subject to the payments to the creditors, as mandated under the Code, it is the prerogative of a Resolution Applicant to decide the distribution of excess/unutilized amount amongst the creditors. The Resolution Plan provides for a total payment of Rs. 1,04,23,940/- towards CIRP cost. In case, the said amount is not fully utilized towards CIRP cost, the balance payment will be paid to the assenting unsecured financial creditor of the Corporate Debtor. Hence, the Respondent has incorporated these considerations, in accordance with its commercial understanding and wisdom, and such incorporation has received due approval from the CoC. Consequently, the Appellant lacks merit to challenge the Resolution Plan, which has been duly approved by the CoC. Admittedly, the Appellant has not al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited 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 and Others (2019) 12 SCC 150 (ii) Committee of Creditors of Essar Steel India Limited Through Authorized Signatory v. Satish Kumar Gupta and Others (2020) 8 SCC 531 (iii) Maharashtra Seamless Limited v. Padmanabhan Venkatesh and others (2020) 11 SCC 467 (iv) Kalpraj Dharamshi and Another v. Kotak Investment Advisors Limited and Another (2021) SCC OnLine SC 204 (v) Ghanashyam Mishra and Sons Private Limited Through the Authorized Signatory v. Edelweiss Asset Reconstruction Company Limited Through the Director & Ors. (2021) 9 SCC 657 (emphasis supplied) 32. Furthermore, this Tribunal in the case titled Sita Chaudhary v. Haryana Telecom Ltd., 2023 SCC OnLine NCLAT 2212, while considering the aforementioned principle, categorically held an approved resolution plan can only be set aside when cogent grounds have been established in terms of Section 61(3) of the Code. 33. It is apposite to note no averments have been made the Appellant in the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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