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TMI Blog2025 (4) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of Section 30(2) of the IBC and Regulation 38 of Regulations, 2016 .............95 (iv) Maximization of the value of the assets of the Corporate Debtor .............98 (v) Whether the NCLAT should have entertained the appeals filed by the 63 Moons under Section 61 of the Code and tinkered with the Resolution Plan approved by the CoC and the NCLT? .............101 VII. ANALYSIS IN THE SECOND CATEGORY OF APPEALS ... .............122 (i) Whether the Resolution Plan violated the Provisions Of RBI Act or NHB Act? .............126 VIII. ANALYSIS IN THE THIRD CATEGORY OF APPEALS .............133 IX. CONCLUSION .............143 GLOSSARY 1. BR Act - The Banking Regulation Act, 1949 2. CD - Corporate Debtor 3. CIRP - Corporate Insolvency Resolution Process 4. CoC - Committee of Creditors 5. DHFL - Dewan Housing Finance Corporation Limited 6. EOI - Expression of Interest 7. FD Holders - Fixed Deposit Holders 8. FSP - Financial Service Provider 9. FSP Rules - Financial Service Provider Rules, 2019 10. GT - M/s. Grant Thornton 11. HFC - Housing Finance Companies 12. IBC - The Insolvency and Bankruptcy Code, 2016 13. NBFC - Non-Banking Financial Companies 14. NCD Holde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts Vinay Kumar Mittal and Others, claiming to be the Fixed Deposit Holders (FDH) of the Corporate Debtor (CD) - Dewan Housing Finance Corporation Limited (DHFL), challenging the common judgment and order dated 27.01.2022 passed by the NCLAT in Company Appeal Nos. 506-507 and 516 of 2022, whereby the NCLAT has held that Section 238 of IBC overrides the Reserve Bank of India Act, 1934 (RBI Act), and the National Housing Bank Act, 1987 (NHB Act), and that Adjudicating Authority/NCLT had not committed any error in approving the RP that proposed extinguishing Claims of the Fixed Deposits, without discharging their payments in full to the FDHs. v. Civil Appeal arising out of Diary No. 6037 of 2022 has been filed by the Appellants Raghu K.S. and Others (claiming to be the Fixed Depositors/Investors in the schemes floated by DHFL), challenging the judgment and order dated 07.02.2022 passed by the NCLAT in Company Appeal No. 538 of 2021, whereby the NCLAT disposed of the Appeal by holding that the issues raised in the said Appeal were the same as raised in Company Appeal Nos. 506, 507 and 516 of 2022 decided on 27.01.2022. vi. Civil Appeal No. 2402 of 2022 has been filed by the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 45-IE (4)(a) of the RBI Act, cannot claim their entitlement to participate in the CoC of the CD, and that a superseded Director from the Board of Directors cannot interfere in the Company's affairs, per contra a suspended Director always remains on the erstwhile Board of the Company and assist the IRP/ RP as per requirement. The Appellant - KW has also challenged the judgment and order dated 27.01.2022 passed by the NCLAT in Company Appeal Nos.370, 376-377 and 393 of 2021, whereby the NCLAT has set aside the order dated 19.05.2021 passed by the NCLT, which had directed the CoC to consider and vote on 2nd Settlement Proposal of KW. xi. Civil Appeal No. 2567 of 2022 has been filed by the Appellant Dheeraj Wadhawan (DW) challenging the impugned judgment and order dated 27.01.2022 passed by the NCLAT in Company Appeal No. 785 of 2020, whereby the NCLAT has held that the Appellant - DW was not entitled to participate in the CoC of DHFL. xii. Civil Appeal Nos. 2987-2988 of 2022 have been filed by the Appellant Piramal Capital challenging the impugned common judgment and order dated 27.01.2022 passed by the NCLAT in Company Appeal No. 785 of 2020 and 647 of 2021, to the extent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; Contributory Provident Fund Trust v. Dewan Housing Finance Corporation Limited and Anr. " 5. Senbagha Vivek A. & Anr v Dewan Housing Finance Corporation Ltd. & Anr. Diary No.11104 of 2022/ Civil Appeal Nos.8123- 8125 of 2022 6. THDC India Limited Employee Fund v The Administrator, Dewan Housing Finance Corporation Ltd. Civil Appeal No.6286 of 2022 III. APPEALS BY EX PROMOTERS- (a) Impugned Order dated14.02.2022 passed in Company Appeal (AT) (Ins) No. 539of 2021 approving the Resolution Plan; (b) Impugned Order dated 27.01.2022 passed in Company Appeal (AT)(Ins) No. 785 of 2020 and 647 of 2021 holding that the Appellant does not have the right to attend CoC meetings or get a copy of the Resolution Plan approved by the CoC; (c) Impugned Order dated 27.01.2022 passed in Company Appeal (AT) (Ins) No. 370 of 2021, 376-377of 2021, 393 of 2021 which set aside the order directing CoC to consider and vote on the second settlement proposal submitted by Appellant 1. Kapil Wadhawan v R. Subramaniakumar and Ors. Civil Appeal Nos.1707- 1712 of 2022 2. Piramal Capital and Housing Finance Limited (Formerly known as Dewan Housing Finance Corporation Limited) v Dheeraj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24.12.2019. The Administrator, on 28.01.2020 issued an invitation for submissions of Expression of Interests (EOI) and Form 'G' for submission of RPs for the CD in accordance with the IBC and the relevant Rules and Regulations made thereunder. Accordingly, the Administrator received 24 EOIs from the PRAs. vi. The Administrator had appointed M/s. Grant Thornton (GT) as Transaction Auditors for unearthing the transactions under Section 43 to 51 and 66 of IBC. vii. The GT after conducting the transaction audit, submitted a report to the Administrator, containing particulars of preferential, undervalued, fraudulent, and extortionate transactions entered into by DHFL, which could be set aside/ avoided under the said provisions of IBC. The Administrator, based on the said report of GT, filed eight Applications before the NCLT regarding the Preferential, Undervalued, and Extortionate transactions, and the Applications with regard to the Fraudulent and Wrongful trading. The said Applications are pending for adjudication by the NCLT. The total amount involved in the Avoidance Applications pending before the NCLT is about Rs.45,050/- Crores. viii. On 02.03.2020, the Administrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a direction for RBI to place before CoC the 2nd Settlement proposal for consideration. xv. On 15.01.2021, all compliant resolution plans (including the SRA's RP) were put to vote during the voting window. The 63 Moons voted in favour of the RP within its class of debenture holders and the RP was approved by a majority of 98.94% votes of the debenture holders. On the basis of the same, the Authorised representative of the class of debenture holders (M/s. Catalyst Trusteeship Limited) voted in favor of the RP before the CoC. Resultantly, the RP of Piramal was approved by an overwhelming majority of the CoC with 93.65 % votes. xvi. On 24.02.2021, following the approval of the RP by the CoC, the Administrator filed an I.A. No. 449 of 2021 ("Plan Approval Application") before the NCLT seeking approval of the RP under Section 31 of the Code. xvii. On 05.03.2021 - The 63 Moons filed an I.A. No. 623 of 2021 in the Plan Approval Application before the NCLT inter alia challenging the provisions of the RP which provided that the Section 66 Recoveries will go to the benefit of the SRA. xviii. On 13.05.2021, the Plan Approval Application and I.A. No. 623 of 2021 were reserved for o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal No. 455 and 454 of 2021 filed by the 63 Moons. Pertinently, this was first time that any challenge was raised by Roopjyot & Ors. against the RP. xxviii. On 06.09.2021, this Court declined to entertain the Civil Appeal Nos. 4672-4673 of 2021 and disposed of the same with a direction to the NCLAT to decide the pending Appeals expeditiously. xxix. On 30.09.2021, the SRA implemented the RP and discharged payment to the creditors. As per the RP, the SRA - Piramal merged into the CD by way of a scheme of arrangement. Resultantly, the SRA - Piramal ceased to exist with effect from 30.09.2021, and the CD under the name "DHFL" remained as the continuing legal entity. xxx. On 27.01.2022, the NCLAT passed the common impugned judgment in the Appeals and directed as follows: "The term in the RP that permits the SRA to appropriate recoveries, if any, from avoidance applications filed under Section 66 of the Code ought to be set aside. The RP be sent back to the CoC for reconsideration on this aspect." xxxi. On 14.02.2022, the NCLAT dismissed the Company Appeal No. 539 of 2021 filed by the erstwhile Promoter KW, recording that the RP is under consideration before the CoC and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng resolution. In fact, the Regulation 37(a) of the CIRP Regulations specifically mentions that the resolution plan shall include measures for the transfer of all or part of the assets of the CD. vii. The NCLAT has incorrectly relied on the foreign jurisprudence and extraneous considerations in impugned judgment. viii. The notional value of INR 1 to Section 66 Applications was legally sound, for the reason that the notional valuation of Section 66 Applications was done in response to the provisions of RFRP issued by the Administrator. ix. In the alternative, the NCLAT had failed to appreciate that value of INR 1 was only notional and the true value ascribed to the Section 66 Applications was embedded in the total resolution amount of INR 37,250 Crores proposed under the RP. x. The impugned judgment amounts to a unilateral modification of RP contrary to the will of the SRA and commercial wisdom exercised by the CoC. xi. The impugned judgment has far-reaching, and undesirable consequences contrary to the intent of the Legislature. (II) In the Second category of Appeals filed by the FD Holders/ NCD Holders challenging the impugned order dated 27.01.2022 passed by the NCLAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot warrant any consideration in these Appeals since they were not accepted by the requisite majority of 89% of CoC. Moreover, an Application under Section 12(A) of IBC for withdrawal of CIRP petition pursuant to a settlement proposal had to be tabled by the RBI, which had refused to do so. ii. Commercial wisdom of CoC is paramount and ascription of notional value INR 1 is acceptable. iii. Decisions taken by an overwhelming majority of CoC basing value of CD as determined by the registered valuers, after negotiations with SRA, is not subject to judicial scrutiny. Resolution Plans cannot be scrutinized from an equitable perception. iv. The Piramal Capital's RP is binding inter se Piramal Capital and CoC, and no modifications are permitted after the approval of the plan by the CoC. v. Independent recourses such as assignments, settlements, and institution of recovery proceedings in respect of loans, impugned in Avoidance applications are valid because it is Piramal Capital's responsibility to ensure a holistic revival of DHFL and resolution of its distressed assets. vi. Pendency of Avoidance applications does not bar the CIRP proceedings. vii. Suspension and Supers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, and the Board of DHFL having been superseded, the promoters did not have any right or locus to challenge the RP approved by CoC. vii. The DHFL had used different enterprise resource planning software application for maintaining fictitious books, loans and verification of financial statement. It was found that the underwriting procedures for loan sanctioning and disbursal were not followed. It was further found that out of sampled 50 entities, 34 entities had invested a portion of amount received from DHFL into the promoter company. viii. As per the GT's report dated 24.09.2020 on Slum Rehabilitation Authority transaction, it was found that the loans aggregating crores of rupees against the master developers and 14 assignee developers for construction of two SRA projects, were used for investments into the companies linked to the promoters of DHFL. ix. The Avoidance and Fraudulent transactions as contemplated in IBC were identified by the GT, wherein it was found that the DHFL had made inter-corporate deposits into three entities, which were used for buying the NCDs of Wadhawan Global Corporation, though the said three entities did not have any income from the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it was decided that all recoveries from Avoidance applications filed by the Administrator would benefit the Piramal Capital. The Respondent No. 1 - 63 Moons had objected, such clause being illegal. The NCLAT having considered the said objection decided the said issue in favour of the Respondent - 63 Moons. ii. As per the settled legal position, the recoveries from Avoidance transactions ought to enure to the benefit of DHFL's creditors only. iii. As per the judgment of Delhi High Court, in case of Venus Recruiters Private Limited vs. Union of India and Others, 2020 SCC OnLine Del 1479 the Avoidance applications are meant to give benefit to the creditors of the CD and not to the CD in its new avatar after the approval of the RP. The said judgment of Delhi High Court was not disturbed upon Appeal before the Division Bench of the High Court, and the SLP against the said decision is pending before this Court. iv. A mandatory statutory duty has been cast upon the Tribunal in terms of Section 31 read with Section 30(2) of the IBC to ensure that a RP which is placed before it for approval has complied with the relevant provisions of law. v. The Respondent - 63 Moons had vote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of third parties. The Explanation to Section 18 of the Code also provides that assets owned by third-party in possession of the CD, held under Trust or under contractual arrangements including bailment, could not be assets for the purpose of Section 18. In this regard, reliance has been placed on the observations made in Embassy Property Developments Private Limited vs. State of Karnataka and Others. (2020) 13 SCC 308. iii. As held by the various High Courts, the monies deposited by the FD Holders are not in the nature of a loan but in fact a deposit to be held in Trust by the Company till the time of maturity. Therefore, the monies deposited by the FD Holders were not the monies of DHFL but in fact were the monies deposited in Trust, thereby making DHFL liable to repay such deposits in full. iv. The NCLT and NCLAT had failed to consider that the repayment obligations of DHFL, which was a deposit receiving Housing Finance Institution, engaged in the business of providing Financial Services in terms of the license granted by NHB and RBI. Hence, the FD Holders ought to have been paid as per the terms of their deposits, in full, in view of the statutory obligation of DHFL. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IBC sets out the duties of the Resolution Professional. One of the duties is to preserve and protect the assets of the CD and to file Avoidance applications for the benefit of the CD. iv. The Avoidance applications are filed in respect of Sections 43, 44, 45, 46, 50 and 51, falling within Chapter III. The provisions pertaining to the Fraudulent trading or Wrongful trading fall under Section 66 contained in Chapter VI. Considering the scheme of the Code, as also the object and purpose of the Code, it is clearly demonstrated that the benefit of the Avoidance applications is intended for the benefit of the CD, for which the responsibility has been cast upon the Resolution Professional. v. The provision of Piramal's RP which permits benefits of Avoidance applications under Section 66 of the Code to be retained by the Piramal Capital is contrary to law. In the alternative, it is submitted that as an exception the benefit of Avoidance applications can be assigned to the third parties, (in the present case Piramal), however, it was the duty of the Resolution Professional to ensure that the assignment was done for proper consideration, and in the instant case, the assignment of Av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to the Financial Service Providers such as the DHFL under the FSP Rules. xv. There was no modification as provided under Rule 5 of the FSP Rules, which could affect the ex- promoter/Director's right of participation. xvi. Piramal Capital cannot be permitted to unjustly enrich itself at the cost of the creditors by retaining the benefit for which it has not paid any value. xvii. The objective of the IBC for value maximization has not been taken into consideration under the shield of commercial wisdom of CoC. xviii. Lastly, no fair and transparent procedure, in the nature of auction/ assignment of the underlying assets for the part of Avoidance transactions, was undertaken to enable the realization of full value of the underlying assets and ensure maximization of value in the interest of the creditors of DHFL. (IV) RELEVANT PROVISIONS OF THE IBC AND OTHER ACTS 11. Before adverting to the rival submissions made by the learned counsels for the parties, let us have a glance through the provisions contained in the IBC and other Acts & Rules relevant for the purpose of deciding these Appeals. 12. As the long title of IBC suggests, IBC has been enacted to consolidat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings of CIRP. 15. Section 29 requires the Resolution Professional to prepare an information memorandum containing relevant information as may be specified by the Insolvency and Bankruptcy Board of India. An eligible RA can submit a RP on the basis of the information memorandum prepared by the Resolution Professional, as per Section 30. The Resolution Professional after examining each RP received by him and after confirming that the same are in consonance with sub-section (2) of Section 30, would present the same to the CoC for its approval. The relevant part of Section 30 is quoted below. "30. Submission of Resolution Plan - (1)............ (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor and such other requirements as may be specified by the Board: Provided.................. (5) & (6) ..................." Sub-section (6) of Section 30 requires the Resolution Professional to submit the RP as approved by the CoC to the Adjudicating Authority. 16. Section 31 being important for the purpose of these appeals, the relevant part thereof is reproduced hereunder: - "31. Approval of Resolution Plan - (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board; (iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or (v) the resolution plan does not comply with any other criteria specified by the Board. (4) & (5) " 20. So far as Avoidance applications under Chapter-III are concerned, Section 43 pertains to the Application to be filed in respect of the Preferential transactions and the relevant time therefor, and Section 44 pertains to the orders that may be passed by the Adjudicating Authority in such application filed under Section 43(1). Section 45 pertains to the Application to be filed for the avoidance of Undervalued transactions, and Section 46 pertains to the relevant period for avoidable transactions. Section 47 pertains to the Application that may be filed by Creditor in cases of Undervalued transactions, and the orders to be passed by the Adjudicating Authority in such Application. Section 48 pertains to the orders that may be passed by the Adjudicating Authority in cases of Undervalued transactions contemplated under sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonably expected of a person carrying out the same functions as are carried out by such director or partner, as the case may be, in relation to the corporate debtor." 22. Section 67 deals with the proceedings under Section 66. It reads as under: - "67. Proceedings under Section 66. - (1) Where the Adjudicating Authority has passed an order under sub-section (1) or sub-section (2) of section 66, as the case may be, it may give such further directions as it may deem appropriate for giving effect to the order, and in particular, the Adjudicating Authority may- (a) provide for the liability of any person under the order to be a charge on any debt or obligation due from the corporate debtor to him, or on any mortgage or charge or any interest in a mortgage or charge on assets of the corporate debtor held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf; and (b) from time to time, make such further directions as may be necessary for enforcing any charge imposed under this section. Explanation. - For the purposes of this section, "assignee" includes a person to whom or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 66, and the orders, if any, of the adjudicating authority in respect of such transactions. (3) The committee shall- (a) evaluate the resolution plans received under sub-regulation (2) as per evaluation matrix; (b) record its deliberations on the feasibility and viability of each resolution plan; and (c) vote on all such resolution plans simultaneously. (3A) Where only one resolution plan is put to vote, it shall be considered approved if it receives requisite votes. (3B).............. (4) The resolution professional shall endeavour to submit the resolution plan approved by the committee to the Adjudicating Authority at least fifteen days before the maximum period for completion of corporate insolvency resolution process under section 12, along with a compliance certificate in Form H of the Schedule and the evidence of receipt of performance security required under sub- regulation (4A) of regulation 36B. (5) to (8)............... (9) A creditor, who is aggrieved by non- implementation of a resolution plan approved under sub-section (1) of section 31, may apply to the Adjudicating Authority for directions." 25. The IBBI has also framed the Regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sub-section (1), appoint a suitable person as the Administrator for such period as it may determine. (3) to (9)............ 27. Section 45 (QA) of RBI Act having been relied upon, the same is reproduced as under: "45QA. Power of Company Law Board to order repayment of deposit. - (1) Every deposit accepted by a non-banking financial company, unless renewed, shall be repaid in accordance with the terms and condition of such deposit. (2) Where a non-banking financial company has failed to repay and deposit or part thereof in accordance with the terms and conditions of such deposit, the Company Law Board constituted under section 10E of the Companies Act, 1956 (1 of 1956), may, if it is satisfied, either on its own motion or on an application of the depositor, that it is necessary so to do to safeguard the interests of the company, the depositors or in the public interest, direct, by order, the non-banking financial company to make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the order: Provided that the Company Law Board may, before making any order under this sub-section, give a reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n certain provisions by Act of 26 of 2019, making the RP approved by the Adjudicating Authority binding on the Central Government, any State Government or local authority to whom a debt is owned in respect of payment of dues arising under any law for the time being in force. 31. If one glances through the scheme of the IBC, its purpose is also explicitly spelt out from the various provisions of the Act itself. The role and importance of the CoC have been stated in Section 21, the duties of the Resolution Professional in Section 25, the approval of RP by the Adjudicating Authority in Section 31. Certain mandates have been given in Section 31 for the effective implementation of the RP, as approved by the CoC. The said requirements are (i) the RP must be approved by the CoC by a vote of not less than 66% of voting share of the financial creditors, as contemplated in sub-section (4) of Section 30. (ii) the RP submitted by the Resolution Professional must confirm the requirements of sub- section (2) of Section 30. The mandatory contents of the RP have also been stated in Regulation 38 of the Regulations, 2016. Thus, having regard to Section 31, it is clear that the Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Satish Kumar Gupta and Others, (2019) 2 SCC 1 this Court had elaborately adverted to the legislative history and delineated the broad contours of the provisions of the IBC, from which it could be seen that the commercial wisdom of CoC has been given prominent status without any judicial intervention, for ensuring the completion of Resolution Process within the timelines prescribed by the IBC. It is also required to be noted that there is a mandate of completing the Resolution Process within 270 days (outer limit), failing which an initiation of Liquidation process has been made inevitable. This Court in the said judgment after discussing the scheme of the Act, and also the earlier judgments, emphasized on the prescription of time- limit for the completion of Insolvency process. Paragraph 75 of the said judgment being relevant is reproduced hereunder: - "75. In fact, even the literal language of Section 12(1) makes it clear that the provision must read as being mandatory. The expression "shall be completed" is used. Further, sub-section (3) makes it clear that the duration of 180 days may be extended further "but not exceeding 90 days", making it clear that a maximum of 270 day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pletely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code. 56.......... 57. On a bare reading of the provisions of the I&B Code, it would appear that the remedy of appeal under Section 61(1) is against an "order passed by the adjudicating authority (NCLT)", which we will assume may also pertain to recording of the fact that the proposed resolution plan has been rejected or not approved by a vote of not less than 75% of voting share of the financial creditors. Indubitably, the remedy of appeal including the width of jurisdiction of the appellate authority and the grounds of appeal, is a creature of statute. The provisions investing jurisdiction and authority in NCLT or Nclat as noticed earlier, have not made the commercial decision exercised by CoC of not approving the resolution plan or rejecting the same, justiciable. This position is reinforced from the limited grounds specified for instituting an appeal that too against an order "approving a resolution plan" under Section 31. First, that the approved resolution plan is in contravention of the provisions of any law for the time being in force. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution applicant to the effect that such dues ought to be paid in full, so that the carrying on of the business of the corporate debtor does not become impossible for want of a most basic and essential element for the carrying on of such business, namely, electricity. This may, in turn, be accepted by the resolution applicant with a consequent modification as to distribution of funds, payment being provided to a certain type of operational creditor, namely, the electricity distribution company, out of upfront payment offered by the proposed resolution applicant which may also result in a consequent reduction of amounts payable to other financial and operational creditors. What is important is that it is the commercial wisdom of this majority of creditors which is to determine, through negotiation with the prospective resolution applicant, as to how and in what manner the corporate resolution process is to take place." 37. On the issue of jurisdiction of the Adjudicating Authority i.e. NCLT and the Appellate Tribunal i.e. NCLAT, it was held in Essar Steel (supra) as under :- "Jurisdiction of the Adjudicating Authority and the Appellate Tribunal 65. As has already been seen h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t comes to the confirmation of a resolution plan, as has been mandated by Section 31(1) of the Code. A harmonious reading, therefore, of Section 31(1) and Section 60(5) of the Code would lead to the result that the residual jurisdiction of NCLT under Section 60(5)(c) cannot, in any manner, whittle down Section 31(1) of the Code, by the investment of some discretionary or equity jurisdiction in the Adjudicating Authority outside Section 30(2) of the Code, when it comes to a resolution plan being adjudicated upon by the Adjudicating Authority. This argument also must needs be rejected." 38. The Court also considered the amendment to Section 30(4) i.e. fourth proviso which was added to sub-section (4) which came into force from 23.11.2017, and observed as under: - "68. Suffice it to observe that the amended provision merely restates as to what the financial creditors are expected to bear in mind whilst expressing their choice during consideration of the proposal for approval of a resolution plan. No more and no less. Indubitably, the legislature has consciously not provided for a ground to challenge the justness of the "commercial decision" expressed by the financial creditors-be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and K. Sashidhar (supra), further held as under- "157. These are binding precedents. Absent a clear legislative provision, this Court will not, by a process of interpretation, confer on the adjudicating authority a power to direct an unwilling CoC to renegotiate a submitted resolution plan or agree to its withdrawal, at the behest of the resolution applicant. The adjudicating authority can only direct the CoC to re-consider certain elements of the resolution plan to ensure compliance under Section 30(2) IBC, before exercising its powers of approval or rejection, as the case may be, under Section 31 [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531, para 73 : (2021) 2 SCC (Civ) 443] . In State of A.P. v. P. Laxmi Devi [State of A.P. v. P. Laxmi Devi, (2008) 4 SCC 720], while determining the constitutionality of a statute, this Court observed that it should be wary of transgressing into the domain of the legislature, especially in matters relating to economic and regulatory legislation. This Court observed : (P. Laxmi Devi case [State of A.P. v. P. Laxmi Devi, (2008) 4 SCC 720] "80. ... As regards economic and other regulatory legislation judicial restraint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... latest decision in M.K. Rajagopalan vs. Dr. Periasamy Palani Gounder and Another (supra), which is worth reproducing: - "160. As noticed hereinbefore, commercial wisdom of CoC is given such a status of primacy that the same is considered rather a matter non- justiciable in any adjudicatory process, be it by the adjudicating authority or even by this Court. However, the commercial wisdom of CoC means a considered decision taken by CoC with reference to the commercial interests and the interest of revival of the corporate debtor and maximisation of value of its assets. This wisdom is not a matter of rhetoric but is denoting a well- considered decision by the protagonist of CIRP i.e. CoC. As observed by this Court in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222], the financial creditors forming CoC "act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision." This Court also observed in K. Sashidhar [K. Sashidhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 30, it shall be binding on the CD and its employees, members, creditors, guarantors and stakeholders. The legislature has consciously not provided for a ground to challenge the justness of the "commercial decision" taken by the Financial Creditors, because one of the dominant purposes of the IBC is revival of the CD and to make it a running concern. 43. While considering the feasibility and viability of the Prospective Resolution Plans, the CoC can always suggest a modification therein and exercise its commercial wisdom. However, once the RP is approved by the requisite majority of CoC, and when such RP is placed before the Adjudicating Authority for its approval under Section 31, the Adjudicating Authority has to only see whether such RP as approved by the CoC meets the requirements as referred to in Section 30(2). It is only where the Adjudicating Authority is satisfied that the RP does not confirm to the requirements of sub-section (1) of Section 31, it may by an order reject the RP. It is true that the NCLT has to decide all the questions on law or fact arising out of or in relation to the insolvency resolution or liquidation under the residuary jurisdiction vested in NCLT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Debtor. Moreover, the same is vitiated by illegalities and material irregularities, and the same could not have been cured on the pretext of the commercial wisdom of CoC." 48. The NCLAT in the impugned judgment, while acknowledging the proposition that the commercial wisdom of the CoC is supreme so far as commercial aspects of the RP is concerned, held that the said principle is not applicable to the present facts where the issue of illegality has been raised. According to the NCLAT, the depositors of DHFL are the rightful beneficiaries, if not owners, of the monies that have been siphoned off by the Promoters/Directors of the CD. The NCLAT thereafter taking resort to Regulation 37A of IBBI (Liquidation Process) Regulations, 2016, observed as under: "9.109 Regulation 37A of the IBBI (Liquidation Process) Regulations, 2016 (the "Liquidation Process Regulations"), which empowers a Liquidator to assign or transfer a not readily realizable asset during the liquidation of a Corporate Debtor. The conspicuous absence of a similar provision in the CIRP Regulations, which permits assignment or transfer of recoveries from avoidance transactions to a resolution applicant, supports the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity should have decided whether the recoveries vested with the corporate debtor should be applied for the benefit of creditors of the corporate debtor, the successful resolution applicant or other stakeholders. In arriving at this decision, the Adjudicating Authority may take note of the facts and circumstances of the case and other listed factors. 18. The Respondents have also argued that the possibility of recovering monies from avoidance transactions is very low. However, the amount of the actual recovery that may be made in the future is entirely irrelevant. Since Respondent No. 2 has ascribed a value of lNR 1 to the avoidance transactions, Respondent No. 2 has not factored in the avoidance transactions in the Resolution Plan amount. Moreover, there is no material on record to suggest that the avoidance transactions have been factored in Respondent No. 2 's Resolution Plan. Therefore, the oral contention of the Respondents that the avoidance transactions have been factored in the Resolution Plan amount is unsupported and not borne out from the material on record. 19. Therefore, the present appeals ought to be allowed. The term in the Resolution Plan that permits the Suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for avoidance of Extortionate Credit transactions under Section 50. 54. Section 26 specifically states that the filing of an Avoidance Application under Clause (j) of sub- section (2) of Section 25 by the Resolution Professional shall not affect the proceedings of CIRP. Meaning thereby, irrespective of the pendency of the Avoidance Applications filed by the Resolution Professional, the CIRP Proceedings could be proceeded further. 55. So far as Section 66 is concerned, the same falls under Chapter VI and it pertains to the "Fraudulent trading or Wrongful trading." Sub-section 1 of Section 66 provides that if during the CIRP or a Liquidation process, it is found that any business of the CD has been carried on with intent to defraud creditors of the CD or for any fraudulent purpose, the Adjudicating Authority may on the application of the Resolution Professional, pass an order that any persons who were knowingly parties to the carrying on of the business in such manner, shall be liable to make such contributions to the assets of the CD, as it may deem fit. From the bare reading of Section 66(1), it is very much discernible that the said provision pertains to the "Fraudulent tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 45(1). He may also pass orders specified in Clause (i) and (ii) of Section 49, in respect of the Undervalued transactions referred to in Section 45(2). 59. In case of Extortionate Credit transactions, as contemplated in Section 50, the Resolution Professional may file Avoidance Application, where the CD had been a party to an Extortionate Credit transaction involving the receipt of financial or operational debt during the period within two years preceding the insolvency commencement date, and where the terms of such transactions required exorbitant payments to be made by the CD. In case of such Extortionate Credit transactions, the Adjudicating Authority may pass any of the orders specified in Clause (a) to (e) of Section 51. It is pertinent to note that in all these types of Avoidance Applications falling under Chapter III, the transactions in question, the properties involved and the persons with whom such transactions were made, could be ascertained by the Adjudicating Authority and therefore it is empowered to pass orders to avoid or set aside such transactions, under Sections 44, 48, 49 and 51, as the case may be. 60. However, in cases of "Fraudulent or Wrongful trading" i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat he is eligible under Section 29(A), to the Resolution Professional prepared on the basis of the information memorandum. On the receipt of RPs from the eligible RAs, the Resolution Professional has to examine each RP to confirm that each RP provides for the payment of Insolvency Resolution Process cost in the manner specified by the Board in priority to the payment of other debts of the CD, and provides for the payment of debts of operational creditors in such manner as may be prescribed by the Board, as required under sub-section (2) of Section 30. The Resolution Professional has also to confirm that each RP provides for the management of the affairs of CD after the approval of the RP; the implementation and supervision of the RP; and also that the plan does not contravene any of the provisions of the law for the time being in force, and such other requirements specified by the Board. The other mandatory contents of a RP have been specified in Regulation 38 of the Regulations, 2016. 63. The Resolution Professional, in view of sub-section (3) of Section 30 has to present to the CoC for its approval such RPs which confirm the conditions referred to in sub-section (2) thereof. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the maximization of the value of the assets of the CD, and that the interest of all the stakeholders has been adequately balanced. However, "What is maximization of the assets" has not been defined in the Code though stated in the Preamble. Of course, it has been referred in Regulation 37 of the Regulations, 2016, which states that RPs shall provide for the measures as may be necessary for insolvency resolution of the CD, for maximization of the value of its assets, which may include the measures as provided in Clauses (a) to (l) thereof. Since the Preamble of IBC envisages "maximization of the value of the assets of the Corporate Debtor," and to promote entrepreneurship, the measures necessary for maximization of assets stated in Regulation 37, amongst others, will have to be taken into consideration by the CoC while considering the proposed RPs for approval. 67. As observed in K. Sashidhar (supra), the Financial Creditors forming CoC, act on the basis of thorough examination of the proposed RPs and the assessment made by their team of experts. The entire process has to be carried out in an absolutely transparent manner, and each and every aspect relating to the RP, and more p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to as the Bandra Books Entities, under Section 60(5) and Section 66 of the Code on August 30, 2020, against Kapil Wadhawan, Dheeraj Wadhawan, Township Developers India Ltd, Wadhawan Holdings Private Limited, Dheeraj Township Developers Private Limited, Wadhawan Consolidated Holdings Pvt. Ltd., Wadhawan Global Hotels & Resorts Pvt. Ltd, Wadhawan Lifestyle Retail Pvt. Ltd. and certain other entities. The amount involved therein is Rs. 17,394 crores. II. 2nd Application was filed on September 27 2020, under Section 60 (5) & 66 of the Code. The Application is about certain irregularities in loan disbursements towards the development of SRA projects undertaken by DHFL in the past. The amount involved therein is Rs. 12,705.53 crores. III. 3rd Application was filed on October 5 2020, under Sections 45, 46, 49, 60(5) and 66 of the Code. The Application is in relation to the undervalued and fraudulent nature of certain agreements entered into by the Company at the time the Company sold its stake in Pramercia Life Insurance Limited to DHFL Investments Limited and certain ICDs given by the DHFL to ICD entities. The amount involved therein is Rs. 2, 150.84 crores. IV. 4th, 5th an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the PRAs had submitted various RPs, amongst which a RP dated 16.10.2020, was submitted by the Piramal Capital bidding for Group A assets under Option II offering 15,000 crores plus an amount of 10% for FD Holders. Then, a RP dated 09.11.2020 was submitted bidding for Group A assets under Option II offering bid amount of Rs.23,700 crores. Another RP dated 17.11.2020 was submitted bidding for Group A assets under Option II offering bid amount of Rs.27,500 crores. RP dated 14.12.2020 was submitted bidding for the entire assets under Option I offering bid amount of Rs.34,950 crores, and bidding for Group A assets under Option II offering bid amount of Rs.27,200 crores. Lastly, Piramal Capital presented the RP dated 22.12.2020 bidding for the entire assets under Option I for Rs. 37,250 crores, or for Group A assets under Option II bidding for Rs.27,200 crores. The treatment of Avoidance transactions under the Resolution Plan dated 22.12.2020 was as under: - "Re: Treatment of avoidance transactions under the Resolution Plan. (xxxi) As regards avoidance transactions, the Resolution Plan provided as follows, in line with the RFRP dated 16 September 2020: "2.13. Treatment of preferent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Adjudicating Authority, such sums shall be for the benefit of the CoC and shall be a pass through amount to the creditors, subject to clause (x) below. 2.13.1. The Administrator shall submit to the CoC, details of the transactions avoided or set aside by the NCLT in terms of Section 43, 45, 47, 49 and 50 of the IBC (Avoidance Transactions), if any, observed, found or determined by him and the orders, if any, of the NCLT in respect of such transactions. 2.13.2. The Resolution Applicant intends to pursue, on a best efforts basis, the application(s) filed by the Administrator before the NCLT in respect of these Avoidance Transactions. Any positive monetary recovery received by the Company as a result of orders passed in relation to the Avoidance Transactions shall be distributed, net of costs and expenses (including taxes), to the Financial Creditors pro rata to the extent the Financial Debt for Financial Creditors, provided that, the CoC may in its discretion adopt a different manner of distribution (which may take into account the order of priority amongst Financial Creditors as laid down in Section 53(1) of the IBC) and such decision of the CoC shall be accepted by the Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofessional filed an application being I.A. No.449 of 2021 (Plan Approval Application) before the NCLT seeking approval under Section 31 of IBC on 24.02.2021, the 63 Moons filed an I.A. being No. 623 of 2021 on 05.03.2021, challenging the provisions of RP which provided that the Recoveries under Section 66 would go to the benefit of SRA. The NCLT vide order dated 07.06.2021 granted its approval to the Plan Approval Application filed by the Administrator, and by separate order dismissed the I.A. No. 623 of 2021 filed by the 63 Moons, holding that the CoC comprising of 77 Financial Creditors had decided in its commercial wisdom to give away the Section 66 Recoveries to the SRA after a hard bargain in exchange of a lumpsum resolution amount of INR 37,250 crores. 75. The NCLAT however entertained the Appeals at the instance of the Appellants - 63 Moons and Roopjyot Engineering Private on the ground that the SRA could not have appropriated the Recoveries from the Avoidance Applications under Section 66 IBC, and that the NCLT while approving the RP had not decided whether the recoveries in respect of the Avoidance transactions vested with the CD, should be applied for the benefit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his vote on behalf of all the Financial Creditors he represents, in accordance with the decision taken by a vote of more than 50% of voting share of the Financial Creditors he represents, who have cast their vote. The vote cast by the Authorized Representative of the class of Financial Creditors, is a vote on behalf of each Financial Creditor to the extent of his voting share. Once the said process is carried out and the Authorized Representative is handed down a particular decision by the requisite majority of voting share, he has to vote accordingly, and his vote would bind all the Financial Creditors he represented. The individual Financial Creditor would thereafter be estopped from raising objection against the decision taken by the majority of the Financial Creditors. As observed in Jaypee Kensington Boulevard Apartments Welfare Association & Others vs. NBCC (India) Limited & Others, 2021 SCC Online SC 253 (Para. 424) in the larger benefit and for common good, the democratic principles of the determinative role of the opinion of majority have been duly incorporated in the scheme of the Code, particularly in the provisions relating to voting on RP and binding nature of the vote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lvency regime of India. Apart from the fact that such foreign texts and precedents relied upon by the NCLAT merely indicated that the proceeds from the Avoidance Applications may be for the benefit of the creditors in a situation when the RP does not deal with its treatment, it is well settled by this Court that the Court should be wary of transplanting international doctrines, which might have been evolved as responses to the specific needs of the jurisdictional regimes. 81. The submission, with regard to the notional value of INR 1 ascribed to Section 66 Applications under the RP, made by the learned counsel appearing for the Respondents in the Appeals filed by the Piramal Capital deserves to be considered only for its rejection. As transpiring from the record of the case, notional valuation of Section 66 Applications was made in response to the provision of RFRP issued by the Administrator. In the valuation reports submitted by the Valuers appointed by the Administrator, NIL value was ascribed to the Avoidance Applications filed by the Administrator, and accordingly the other compliant RAs had also ascribed NIL value to the said Applications. However, according to the SRA, sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat was palpable on the face of the approved RP, and the CoC having taken a firm commercial decision with regard to the impugned clause of RP by voting overwhelmingly in favour of the RP, the NCLAT ought not to have interfered with the said clause of RP approved by the CoC and the NCLT. 84. As per the legislative intent and as per the broad contours of the provisions of IBC, the commercial wisdom of CoC has been given the prominent status, with the least judicial intervention, for ensuring the completion of Resolution Process within the prescribed timelines. As stated earlier, in Essar Steel (supra), this Court after discussing earlier judgments had observed that what is left to the majority decision of the CoC is the "feasibility and viability" of a RP, which obviously takes into account all aspects of the plan, including the manner of distribution of funds among the various classes of Creditors. The legislature has consciously not provided for a ground to challenge the justness of the commercial decision expressed by the Financial Creditors - be it to approve or reject the RP. Similar view is taken by the Three Judge Bench in Ghanashyam Mishra (supra) to the effect that the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, all the Appeals in this category deserve to be allowed by setting aside the impugned order dated 27.01.2022 passed by the NCLAT and restoring the order dated 07.06.2021 passed by the NCLT in the Plan Approval Order. (VII) ANALYSIS IN THE SECOND CATEGORY OF APPEALS 88. The Second category of Appeals cover the Appeals filed by several Fixed Deposit Holders and one Non- Convertible Debenture Holder of the CD, challenging the RP dated 22.12.2020. The details of the said Appellants and the impugned judgments may be stated as under: - (1) Raghu KS and Ors. vs. Piramal Capital & Housing Finance Limited & Ors. (Diary No.6037 of 2022): This Civil Appeal has been filed by 41 individual FD Holders challenging the judgment dated 07.02.2022 passed by the NCLAT in Company Appeal No. 538 of 2021. PCHFL is Respondent No.1 in this appeal. (2) Vinay Kumar Mittal & Ors. vs. Dewan Housing Finance Corporation Ltd. & Ors. (Civil Appeal No.2413-2415 of 2022) ("V.K. Mittal"): These appeals have been filed by 14 individual FD Holders challenging the common judgment dated 27.01.2022 passed by the NCLAT in Company Appeal Nos.506, 507 and 516 of 2021. PCHFL is Respondent No.6 in these Appeals. (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved by the majority of 86.95% of CoC. Under the Distribution mechanism, it was provided as under: - (i) FD Holders having an admitted claim of upto INR 2 lakhs were to be repaid their entire deposit amount; and (ii) FD Holders having an admitted claim of more than INR 2 lakhs would receive an amount equivalent to liquidation value of security created for the benefit of the Depositors for the additional aggregate claim above INR 2 lakhs. 91. Some of the FD Holders including the Appellants in this second category of Appeals, challenged the said RP before the NCLT on the ground that the RP had failed to provide for full repayment of their deposits. 92. The NCLT on 07.06.2021 approved the said RP by passing the Plan Approval Order. The NCLT also passed a separate order disposing of the Applications filed by the FD Holders recommending that CoC may reconsider the distribution of resolution amount keeping in view the interest of the FD Holders and other small investors. In the light of the said order, the CoC in its 20th Meeting put to vote a Resolution for maintaining parity between the FD Holders and other Secured Creditors. The said Resolution was rejected by approximately 89 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the country to regulate to its advantage. The Chapter III(B) of the RBI Act incorporates the "Provisions relating to the Non-Banking Institutions receiving deposits and financial institutions." Section 45-1(bb) defines "Deposit" and Section 45-I(f) defines "Non- Banking Financial Company." Section 45(QA) empowers the Company Law Board (CLB) to direct by order, the Non-Banking Financial Company which has failed to repay the deposit accepted by it in accordance with the terms and conditions of such deposit, to make repayment of such deposit or part thereof, if the CLB is satisfied that it is necessary to do so to safeguard the interest of the company, the depositors or in the public interest. 95. It is not disputed that the CD - DHFL being a Housing Finance Institution and Non-Banking Financial Company, was governed by the NHB Act and RBI Act, however pertinently, neither Section 36(A) of NHB Act nor Section 45 (QA) of RBI Act mandates full payment of the deposits of the FD Holders, as sought to be contended by the learned counsels for the Appellants. Both the Sections 36(A) of NHB Act and 45(QA) of the RBI Act containing almost similar provisions, require the Housing Finance Insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97. As stated earlier, the CoC rejected the said recommendation by approximately 89% of the CoC in its 20th Meeting, which decision came to be challenged before the NCLAT. The NCLAT also vide the impugned order dismissed the same by holding inter alia that the Administrator was under no obligation to ensure full payment of deposits to the FD Holders under the RBI Act or the NHB Act, and that the decision about the payments to the creditors fell within the commercial wisdom of CoC which was not amenable to judicial review, subject to fair and equitable play. We do not find any legal infirmity in the said impugned order passed by the NCLAT. We have already discussed in detail about the scope of judicial review by the NCLT under Section 31 and by NCLAT under Section 61 of the IBC, and the legal position settled by this Court in catena of decisions. Hence, the same is not reiterated herein. 98. We also do not find any substance in the submissions made by the learned counsels for the Appellants that the RP violated Rule 5(d)(i) of the Financial Service Providers and Application to Adjudicating Authority Rules, 2019 (FSP Rules). In this regard, it may be noted that the said Rule 5(d)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the NCLAT, holding that the erstwhile Director, Promoter, Shareholder and Guarantor of DHFL was not entitled to participate in the meeting of CoC. (5) The Civil Appeal Nos. 2987-2988 of 2022 have been filed by the SRA - Piramal Capital challenging the impugned judgment and order dated 27.01.2022 in Company Appeal No. 785 of 2020 and 647 of 2021 passed by the NCLAT, in which it has been held that the erstwhile Directors who had vacated the offices were not entitled to share any document, however the copy of RP after the approval from Adjudicating Authority cannot be treated as a confidential document, and therefore a certified copy may be issued to the erstwhile Directors as per the Rules. 101. The core issue raised by learned Senior Counsel Mr. Kapil Sibal appearing for the erstwhile Directors KW and DW was that the Resolution Professional, that is the Administrator in this case, and the CoC had not undertaken any efforts for value maximization of DHFL's assets and businesses, which is the underlying object of the IBC. According to him the Appellants - Ex-Promoters/ Directors were kept out of the entire CIRP proceedings and were not given any opportunity to participate in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be noted that as per sub-section (4) of Section 45 - (IE) of the RBI Act, on passing of the order of supersession of the Board of Directors of a Non- Banking Financial Company (DHFL), the Chairman, Managing Director and other Directors have to vacate their offices from the date of supersession of the Board of Directors, and then all the powers, functions and duties, which are required to be exercised by them under the provisions of RBI Act or any other law for the time being in force, have to be exercised and discharged by the Administrator appointed by the RBI, till the Board of Directors of such company is reconstituted. 105. Thus, by virtue of the said provision contained in Section 45-IE and by virtue of the order passed by the RBI thereunder, the Board of Directors of DHFL had stood superseded and their offices also stood vacated on the appointment of the Administrator. Thereafter, on the initiation of CIRP and on the appointment of an Interim Resolution Professional by the Adjudicating Authority, the management of the affairs of the CD had stood vested in the Interim Resolution Professional (the Administrator in this case) and the powers of the Board of Directors of the CD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every member of the committee only after receipt of resolution plans in accordance with the Code [see Regulation 35(2)]. Also, under Regulation 38(1-A), a resolution plan shall include a statement as to how it has dealt with the interest of all stakeholders, and under sub- regulation (3)(a), a resolution plan shall demonstrate that it addresses the cause of default. This Regulation also, therefore, recognises the vital interest of the erstwhile Board of Directors in a resolution plan together with the cause of default. It is here that the erstwhile Directors can represent to the Committee of Creditors that the cause of default is not due to the erstwhile management, but due to other factors which may be beyond their control, which have led to non-payment of the debt. Therefore, a combined reading of the Code as well as the Regulations leads to the conclusion that members of the erstwhile Board of Directors, being vitally interested in resolution plans that may be discussed at meetings of the Committee of Creditors, must be given a copy of such plans as part of "documents" that have to be furnished along with the notice of such meetings." 109. In the instant case, however, it dese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be. The recoveries/benefits that may follow from such Applications shall be appropriated in favour of the CoC in case of Avoidance Applications under Section 43, 45 and 50, and in favour of SRA-Piramal Capital in case of Applications under Section 66 of IBC. (2) The Civil Appeal Nos. 1632-1634 of 2022 filed by the Piramal Capital and Housing Finance Limited and the Civil Appeal Nos. 2989-2991 of 2022 filed by the Union Bank of India stand allowed. (3) The Civil Appeal Nos. 3694-3695 of 2022 filed by 63 Moons Technologies Limited stands disposed of. (4) The Appeal arising out of D. No. 6037 of 2022 filed by Raghu K.S. & Others, Civil Appeal Nos. 2413-2415 of 2022 filed by Vinay Kumar Mittal & Others, Civil Appeal No. 2396 of 2022 filed by Uttar Pradesh State Power Sector Employees Trust and Civil Appeal No. 2402 of 2022 filed by Uttar Pradesh State Power Corporation Contributory Provident Fund Trust, Civil Appeal Nos. 8123-8125 of 2022 filed by Senbagha Vivek A & Another and Civil Appeal No. 6286 of 2022 filed by THDC India Limited Employee Provident Fund are dismissed. (5) The Civil Appeal Nos. 1707-1712 of 2022 filed by Kapil Wadhawan, Civil Appeal No. 2567 of 2022 filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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