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TMI Blog2025 (3) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... onal Creditors whose aggregate due is not less than 10% of the debt have a right to watch the proceedings of the CoC and express their views in the meetings without however any right to vote. In the present case, there is no denial of the fact that the Appellant received notice of the CoC meetings from the RP. As the Appellant was kept informed of the CoC meetings and records show their regular participation in such meetings, they had full knowledge of the CIRP proceedings. They were therefore equally aware of the extensions of CIRP time-lines approved by the CoC but these extensions by the CoC were not questioned by them at the appropriate time. The issue was neither agitated before the Adjudicating Authority at the right point of time and is now being raked up belatedly. In the present case, the 23rd CoC meeting on 04.12.2023 had taken note of the fact that it was in an advanced stage of considering the resolution plans before it and since the extended CIRP period was getting expired on 10.12.2023, the CoC approved seeking further extension of CIRP period. Clearly enough, CoC having taken a considered decision in this regard, this constituted sufficient grounds for the Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile RP JUDGMENT ( Hybrid Mode ) Per : Barun Mitra , Member ( Technical ) The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 ('IBC' in short) by the Appellant arises out of the Order dated 27.11.2024 (hereinafter referred to as 'Impugned Order') passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench-II) in IA No 6 of 2024 in CP(IB)/9(AHM)2021. By the impugned order, the Adjudicating Authority has approved the resolution plan of the Corporate Debtor as submitted by the Resolution Professional. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant-Operational Creditor. 2. The sequence of events which are necessary to be noticed for deciding the present appeal are as follows : On 07.12.2022, the CIRP of the Corporate Debtor was initiated and IRP was appointed. The IRP constituted the CoC comprising of two Secured Financial Creditors and two Unsecured Financial Creditors. The first CoC meeting was held on 13.01.2023. On 10.03.2023, the Form-G was published by the IRP inviting EOIs. On 05.06.2023, the CIRP period of 180 days had expired. The Resolution Professional ("RP" in short) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation report of the Corporate Debtor either to the Appellant or to other members of the CoC but only furnished bare figures of fair value and liquidation value. In the absence of valid and detailed valuation reports, the CoC would have been handicapped to exercise its commercial wisdom judiciously. However, the Adjudicating Authority has overlooked these procedural irregularities in approving the resolution plan. 4. It was also pointed out that the RP had admitted claim of Rs 69,08,949/- claimed by the Appellant and that the aggregate admitted claim of all Operational Creditors put together worked out to Rs 18,34,60,969/-. However, as against a composite claim of Rs 18.34 Cr. of the Operational Creditors, the Successful Resolution Applicant has offered only Rs 60 lakhs for payment to Operational Creditors. The resolution plan therefore prejudiced the interests of Operational Creditors and amounted to non-compliance with Section 30(2)(b) of IBC. 5. Refuting the contentions raised by the Appellant, the Ld. Counsel for the Respondent submitted that the resolution plan could have been challenged only on the grounds laid down under Section 61(3) of the IBC but no such grounds have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere material irregularities in the exercise of powers by the RP in the CIRP proceedings; whether the claims of the Operational Creditors did not receive their dues or whether there was any contravention of the provisions of law. 8. Coming to the contentions raised by the Appellant with regard to material and procedural irregularities, we find that the Appellant has assailed the impugned order approving the resolution plan on the ground that the plan was approved by the Adjudicating Authority after expiry of 330 days of CIRP period. There is no doubt that in terms of Section 24(3)(c) of the IBC, it is the duty of the RP to give notice to the Operational Creditors or their representatives regarding the CoC meetings if the amount of their aggregate due is not less than 10% of the debt. It is also well settled that such Operational Creditors whose aggregate due is not less than 10% of the debt have a right to watch the proceedings of the CoC and express their views in the meetings without however any right to vote. In the present case, there is no denial of the fact that the Appellant received notice of the CoC meetings from the RP. As the Appellant was kept informed of the CoC meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant to the present case subject to approval of Chairman. One of the CoC members i.e. Riddhi Siddhi GlucoBiols Limited represented by their authorised representative required and insisted the RP to provide them the Valuation Reports of the Corporate Debtor to share ahead with prospective buyers. The RP informed that he can only share the Fair Value & Liquidation Value of the Corporate Debtor. The RP drew their attention to the regulations of the IBC, 2016 that as per the Regulation 35(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 which is quoted below: "After the receipt of resolution plans in accordance with the Code and these regulations, the resolution professional shall provide the fair values and the liquidation value to every member of the committee in electronic form, on receiving an undertaking from the member to the effect that such member shall maintain confidentiality of the fair value and the liquidation value and shall not use such values to cause an undue gain or undue lass to itself or any other person and comply with the requirements under sub-section (2) of section 29" The RP e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan approval process into disarray. 15. Yet another contention of the Appellant was that the plan was wrongly approved by the Adjudicating Authority without the plan conforming to the statutory provision as contained in Section 30(2)(b) of the IBC. This argument was premised on the ground that the Appellant as Operational Creditor had not been allocated amount as per their entitlement under Section 30(2)(b) of IBC. 16. To decide on the tenability of the above argument, we may first notice the provisions contained in Section 30(2)(b) of the IBC which reads as follows: Section 30: Submission of resolution plan. 30. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor; (b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than- (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (ii) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plan having been approved by majority of votes, the Operational Creditor is clearly bound by the approved resolution plan. We therefore are of the considered view that the Adjudicating Authority did not commit any error while approving the resolution plan after noting its satisfaction at para 26 of the impugned order about the plan being in compliance of the provisions of the IBC in terms of Section 30(2) of the IBC. 20. It may be useful to notice that Section 30 of the IBC which deals with submission of Resolution Plan and sub-section (6) thereto states that "the resolution professional shall submit the Resolution Plan as approved by the Committee of Creditors to the Adjudicating Authority". In the present case, the RP after approval of the plan by the CoC with 97.36% vote share filed an application before the Adjudicating Authority seeking approval of the Resolution Plan under Section 31 of the Code. Section 31 deals with approval of Resolution Plan. Section 31(1) provides that if the Adjudicating Authority is satisfied that the Resolution Plan as approved by the CoC under Section 30(4) meets the requirements as referred to in Section 30(2), it shall by order approve the resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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