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TMI Blog2025 (3) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... een submitted by Resolution Applicants, no Applicant can be permitted to enhance its financial offer. The Appellant is only a Resolution Applicant and his claim can at best be with regard to considering of his Resolution Plan in accordance with law by the CoC. The Resolution Plan submitted by the Appellant was deliberated, compared with Resolution Plan of Orissa Metaliks and was approved with vote shares of more than 98% of the CoC. It is well settled that commercial wisdom of CoC in approving the Resolution Plan is not required to be interfered with by the Adjudicating Authority while approving the Resolution Plan, unless the Adjudicating Authority is satisfied that Resolution Plan is not compliant of Section 30, sub-section (2). Present is not a case where there is any ground that Resolution Plan submitted by SRA is not compliant. The scope of interference in commercial wisdom of CoC is minimal. The Hon'ble Supreme Court in K. Sashidhar vs. Indian Overseas Bank and Ors [2019 (2) TMI 1043 - SUPREME COURT] held that the commercial wisdom of CoC has been given paramount status without any judicial intervention. Conclusion - Regulation 39 (1A) of CIRP Regulations, 2016 is an enabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C"). The Adjudicating Authority passed an order on IA No.504 of 2024, permitting the Appellant to submit Resolution Plan, which shall be scrutinized by the CoC on all aspect, including their eligibility. The Appellant was directed to submit the Resolution Plan within three days. The Appellant submitted his Resolution Plan on 04.05.2024. (v) All Resolution Applicants were given opportunity to submit revised Resolution Plan on 08.05.2024. In the 30th CoC Meeting dated 09.05.2024, the CoC further granted time till 14.05.2024 to all Resolution Applicants to complete their due diligence and submit revised Resolution Plan complying with all the requisite provisions of the IBC. On 14.05.2024, the Appellant submitted its revised Resolution Plan. The CoC on 18.06.2024 granted final opportunity to all Prospective Resolution Applicants to submit their final Plan till 24.06.2024. The Appellant submitted its revised Resolution Plan on 24.06.2024. In the 33rd CoC Meeting convened on 25.06.2024 all three revised Resolution Plans were presented by the RP before the CoC. (vi) On 01.07.2024, the Appellant sent an email to the RP and asked the RP for intimating as to when the Plants will re-start ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary for the CoC and the RP to conduct Swiss Challenge Mechanism, so as to maximize the value of the CD. The Plan was approved without resorting to Swiss Challenge Mechanism. The Appellant was initially being treated as 'related party' and it was only after obtaining legal opinion, the Appellant was considered as 'un-related party' and his Resolution Plan was considered. After submitting the Resolution Plan on 24.06.2024, the Appellant vide email dated 01.07.2024, requested the RP to inform as to whether it needs to increase its bid amount. The RP informed the Appellant not to increase the bid, due to which the Appellant did not increase the bid. The CoC approved the Resolution Plan of Orissa Metaliks and did not approve the Plan of the Appellant. Had the Appellant permitted to increase his bid, it would have offered the higher amount. The Resolution Plan entails a huge tax advantage to Orissa Metaliks. The Resolution Plan appears to have been approved in haste. 5. Shri Ankur Mittal, learned Counsel for the CoC refuting the submission of the Appellant submitted that various opportunities were given to all Resolution Applicants to submit the revised Plan and last revised Plan was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors as well as investment for the envisaged turnaround of the CD. The members of CoC highlighted that an independent legal opinion was sought basis which it is found that Hampton was ineligible under Section 29A of the Code. Moreover, Hampton had also not deposited the earnest money of INR 2 Crore, along with the submission of plan, as required in accordance with the terms of RFRP. The CoC decided not to consider the plan submitted by Hampton." 4.12. The resolution plan of Findoc and Orissa Metaliks were put to vote in the 35th CoC meeting dated 11.07.2024. The voting line for the approval of the resolution plans of Findoc and Orissa Metaliks was open from 16 July 2024 and was open till 23 July 2024 and was thereafter extended till 24 July 2024. Thereafter, the CoC approved Resolution Plan of Orissa Metaliks Private Limited by a majority of 98.94% of the CoC and passed the following resolution: "RESOLVED THAT pursuant to Section 30(4) of the Insolvency and Bankruptcy Code, 2016 read with the relevant rules and regulations framed thereunder, as amended, the Resolution Plan dated 08 July 2024 submitted by Orissa Metaliks Private Limited, be and is hereby approved by the Commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the RP, after taking requisite approval from CoC before commencement of the Swiss Challenge Mechanism process or any other challenge mechanism. An indicative procedure (subject to such changes/ modifications/ alterations as the CoC may decide in its sole discretion) is appended in Format 15. Further, the Resolution Professional under directions of the CoC reserve the right to use any challenge mechanism including Swiss Challenge Mechanism, outbidding process, open challenge or any other price discovery process to ascertain the Successful Resolution Applicant after receipt of all resolution plans and it shall be binding on the Resolution Applicants. It is clarified that modification of the Resolution Plan shall in no manner allow the Resolution Applicant to reduce proposed Resolution Plan Amount and shall not be allowed to modify any other terms of their Resolution Plan, and any such modification shall not be considered by the CoC" 10. The expression used in the above Clause is "The CoC, in its discretion, may decide to adopt Swiss Challenge Mechanism to ascertain the Successful Resolution Applicant after receipt of all resolution plans". The above Clause thus vests discretion on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our email dated 24 June 2024, wherein Findoc Finvest Private Limited (Findoc") has submitted the Revised Resolution Plan in the ongoing resolution process of Metenere Limited, upon instructions of the CoC and pursuant to Order of Hon'ble NCLT dated 01. May 2024, Please find attached herewith observations of the Legal Counsels on Findoc's Resolution Plan. You are requested to kindly address these observations and send the Resolution Plan along with all the required documents and annexures as per RFRP dated 18 January 2024, by 04 July 2024, including all relevant documents relating to Findoc's 29A compliance. Please note that this email correspondence for submission of the Resolution Plan after incorporating Legal Counsel's observation, shall not be construed as an opportunity to revise the financial proposal submitted in the Revised Resolution Plan dated 24 June 2024 and accordingly, no changes to the financial proposal in your Revised Resolution Plan dated 24 June 2024 is permitted in your further revised Resolution Plan. Your further revised resolution plan addressing the compliance related and other observations (as attached) should be sent without any password ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 98% of the CoC. It is well settled that commercial wisdom of CoC in approving the Resolution Plan is not required to be interfered with by the Adjudicating Authority while approving the Resolution Plan, unless the Adjudicating Authority is satisfied that Resolution Plan is not compliant of Section 30, sub-section (2). Present is not a case where there is any ground that Resolution Plan submitted by SRA is not compliant. The scope of interference in commercial wisdom of CoC is minimal. The Hon'ble Supreme Court in K. Sashidhar vs. Indian Overseas Bank and Ors. - (2019) 12 SCC 150 in paragraphs 52 and 59 has laid down following: "52. As aforesaid, upon receipt of a "rejected" resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified per cent (25% in October 2017; and now after the amendment w.e.f. 6-6-2018, 44%). The inevitable outcome of voting by not less than requisite per cent of voting share of financial creditors to disapprove the proposed resolution plan, de jure, entails in its deemed rejection." 16. Learned Counsel for the Appellant relying on Regulation 39 (1A) of CIRP Regulations, 2016 submits that RP could have allowed modification at least once. Regulation 39 (1A) is as follows: "39(1A) The resolution professional may, if envisaged in the request for resolution plan- (a) allow modification of the resolution plan received under sub-regulation (1), but not more than once; or (b) use a challenge mechanism to enable resolution applicants to improve their plans. 17. The above Regulation is an enabling Regulation and does not cast any obligation to permit modification of a Resolution Plan. In present case all Resolution Applicants were permitted to submit revised Resolution Plan. The CoC having not instructed the RP to permit any modification in Plan, RP cannot be said to have faulte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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