Alok Srivastava JUDGMENT
Ashok Bhushan, J. (Chairperson)
1. This Appeal has been filed by an Unsuccessful Resolution Applicant challenging the order of the Adjudicating Authority dated 13.10.2021 by which the Adjudicating Authority has approved the Resolution Plan of Respondent No. 3.
2. The Corporate Insolvency Resolution Process (CIRP) was initiated against Bohra Industries Limited - the Corporate Debtor, by order dated 9th August, 2019. After publication of Form-G on 21.10.2019 a Resolution Plan was submitted by the Appellant. In Committee of Creditors (CoC) meeting dated 10th June, 2020, the Appellant made a statement that it had given its best offer. The possibility of any upward revision in Appellant offer was declined. A resolution was passed authorizing Resolution Professional to publish a fresh Form-G, inviting Expression of Interest to submit Resolution Plan for Bohra Industries Limited. In the 9th CoC meeting, Resolution Professional requested that CoC may deliberate on Resolution Plan submitted by the Appellant as well as another Resolution Plan submitted by consortium of six individual. CoC decided to choose to discuss the Resolution Plan with Resolution Applicants separately. In the 10th CoC meeting held on 25th August, 2020, both the Resolution Applicants were asked to give their updated revised Resolution Plans on or before 2nd September, 2020. The representatives of CoC categorically asked to increase the amount offered in the respective Resolution Plans. In 11th, 12th and 13th COC meeting, both the Resolution Applicants were given opportunity to revise the Plan. Thirteenth COC meeting was held on 18th September, 2020 in which it was noted that both the Resolution Applicants have sent their final plan. On 19.09.2020, it was circulated to CoC. Fourteenth CoC meeting was held to take vote of CoC on the Resolution Plan. The CoC decided to approve the Resolution Plan submitted by consortium of six individuals, i.e. Respondent No. 3 and declared the same as approved with 100% voting and Resolution Plan submitted by the Appellant was rejected with 100% voting. Hence, an Application was filed before the Adjudicating Authority for approval of the Resolution Plan. The Adjudicating Authority by the impugned order dated 13.10.2021 has approved the Resolution Plan of Respondent No. 3. Aggrieved against which judgment this Appeal has been filed.
3. Learned Counsel for the Appellant challenging the order passed by the Adjudicating Authority contends that Adjudicating Authority had committed error in approving the Resolution Plan of Respondent No. 3. It is submitted that under the evaluation matrix, the higher upfront payment was to be preferred and the Appellant having offered higher upfront payment was to be given the opportunity. It was submitted by learned Counsel for the Appellant that score of evaluation matrix was neither disclosed nor deliberated and the Resolution Plan was not as per evaluation matrix. It is submitted that as per Regulation 39(3)(a) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the approved Resolution Plan was not as per evaluation matrix. Learned Counsel for the Appellant submits that Appellant's Plan had higher value. Learned Counsel further submits that no opportunity was given to the Appellant to enhance the value of its Plan. It is submitted that various circulars issued by IBBI were not followed by the CoC while approving the Resolution Plan of Respondent No. 3.
4. When the Appeal was heard by this Tribunal on 03.12.2021, the following order was passed:
"03.12.2021: Learned Counsel appearing for the CoC prays for time to file reply giving the details of the evaluation matrix, the plan value and other relevant facts which weighed with the CoC to approve the Resolution Plan. He may do so within three days. Learned Counsel for the Appellant may respond in further three days.
List the Appeal on 17th December, 2021."
5. In pursuance of the order dated 03.12.2021, a short reply on behalf of the Respondent No. 2 was filed.
6. Learned Counsel for the Respondent No. 2 refuting the submissions of learned Counsel for the Appellant, contends that CoC with 100% vote has approved the Resolution Plan of Respondent No. 3 and the Resolution Plan of the Appellant was rejected with 100% vote. It is submitted that evaluation matrix has been duly followed by the CoC while approving the Resolution Plan of Respondent No. 3. The Successful Resolution Applicant had scored higher on the evaluation matrix, hence the argument of the Appellant is without any basis. It is further submitted that value of the Resolution Plan of the Successful Resolution Applicant was more than the Appellant. The learned Counsel for Respondent No. 2 submits that multiple opportunities were granted to the Appellant to revise its Plan. It is submitted that in 10th, 11th, 12th and 13th CoC meeting opportunities were granted to both the Resolution Applicants to revise their Plans.
7. We have considered the submissions of learned Counsel for the parties and perused the records.
8. As noted above, this Tribunal has specifically directed the CoC to file reply giving details of evaluation matrix, the plan value and other relevant facts, which weighed with the COC to approve the Resolution Plan. The details of evaluation matrix have been given in paragraph 5.1 of the reply, which is to the following effect:
"5.1 The evaluation matrix has been duly followed by the CoC while approving/rejecting the resolution plan, and moreover, evaluation matrix falls within the ambit of commercial wisdom of the CoC and is non-justiciable.
a. The Appellant has made an attempt to mislead this Hon'ble Appellate Tribunal by stating that the CoC has failed to adhere to the evaluation matrix set out in the RFRP issued by the RP to resolution applicants, and that considering the upfront amount provided in its plan and its experience in the industry, the Appellant's plan should have been approved by the CoC.
b. It is humbly submitted that evaluation matrix has been duly followed by the CoC in arriving at its decision. Further, the Successful Resolution Applicant has scored higher on the evaluation matrix, and thus the argument of Appellant is without any basis. The Successful Resolution Applicant scored 51.49 marks and the appellant scored 48.51 marks."
9. With regard to the value of the Resolution Plan, following is stated in paragraph 5.2:
"5.2 The value of resolution plan of Successful Resolution Applicant was more than the appellant herein.
a. The value of plan of Successful resolution applicant is 26.31 Crores with NPV as 24.79 Crores, while the plan value of appellant was 21.25 Crore.
b. The value of the resolution plan submitted by Respondent No. 3 is approximately 25% higher than that of the Appellant"
10. Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which deals with the Approval of Resolution Plan, the sub-regulation (3) of Section 39 provides
"39(3) The committee shall evaluate the resolution plan received under sub-regulation (1) strictly as per the evaluation matrix to identify the best resolution plan and may approve it with such modification as it deems fit:
Provided that the committee shall record its deliberations on the feasibility and viability of the resolution plan."
11. The score of evaluation matrix of Respondent No. 3 being higher to the evaluation matrix of the Appellant, the submission of learned Counsel for the Appellant that CoC's decision not in accordance with Regulation 39 sub-regulation (3) cannot be accepted. The CoC has evaluated the Resolution Plan as per evaluation matrix. We do not find any breach of regulation 39 of sub-regulation (3) in the present case.
12. The value of Plan of Respondent No. 3 was 26.31 cores with NPV as 24.79 crores while Plan value of the Appellant was only 21.25 crores. The CoC has approved the Plan of Respondent No. 3 with 100% vote.
13. As per Section 32 of the IB Code, any appeal from an order approving the resolution plan shall be in the manner and on the grounds laid down in sub-section (3) of Section 61. Section 61, sub-section (3) provides as follows:
"61(3) An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely:-
(i) the approved resolution plan is in contravention of the provisions of any law for the time being in force;
(ii) there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;
(iii) the debts 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."
14. The Hon'ble Apex Court in MANU/SC/0189/2019 : (2019) 12 SCC 150 in K. Sashidhar vs. Indian Overseas Bank and Ors. had occasion to consider the ground of challenge of approval of Resolution Plan and held that the commercial wisdom of the CoC expressed after due deliberation has to be given weight. In paragraph 52, following observation has been made by the Hon'ble Supreme Court:
"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&B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of the Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They 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. The legislature, consciously, has not provided any ground to challenge the "commercial wisdom" of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable."
15. In another three Judge Bench judgment in Committee of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta and Ors., in paragraph 48, the following has been laid down:
"48. The detailed provisions that have been stated hereinabove make it clear that the resolution professional is a person who is not only to manage the affairs of the corporate debtor as a going concern from the stage of admission of an application under Sections 7, 9 or 10 of the Code till a resolution plan is approved by the Adjudicating Authority, but is also a key person who is to appoint and convene meetings of the Committee of Creditors, so that they may decide upon resolution plans that are submitted in accordance with the detailed information given to resolution applicants by the resolution professional. Another very important function of the resolution professional is to collect, collate and finally admit claims of all creditors, which must then be examined for payment, in full or in part or not at all, by the resolution applicant and be finally negotiated and decided by the Committee of Creditors."
16. Learned Counsel for the Appellant submits that although in the 9th CoC meeting, the Appellant stated that the Appellant declined the possibility of any upward revision in Appellant's offer, but that was the time when only 1st Plan was there. He submits that no opportunity was given to the Appellant to enhance its value of Resolution Plan. The said submission has to be rejected. The Appellant himself in his Appeal in Annexure A-11, has filed the Minutes of the 9th, 10th, 11th, 12th and 13th CoC Meeting. A perusal of the minutes clearly indicate that both the Resolution Applicants were given multiple opportunities to submit their revised Plans. The submission of the Appellant that he was not given opportunity to revise the Plan after receipt of 2nd Plan of Respondent No. 3, is without any substance and against the record. The Plans of both the Resolution Applicants were deliberated by the CoC in several meetings and both the Resolution Applicants were requested to enhance the value of their Plans. Final Plans were received by the Resolution Professional from both the Resolution Applicants before 19.09.2020 and thereafter, it was put to vote. By 100% vote of CoC, the Plan of Respondent No. 3 was accepted and Plan of Appellant was rejected.
17. The Adjudicating Authority in the impugned judgment has returned a finding that Resolution Plan approved by the Committee of Creditors is as per provisions of Section 30(2)(a) to 30(2) sub-section (e) and also complies the provisions of Regulation 38 and 39. The Resolution Plan dated 09.09.2020 along with all addendums dated 19.09.2020 as approved by the CoC, was rightly approved by the Adjudicating Authority by the impugned judgment.
18. We do not find any error in the impugned order passed by the Adjudicating Authority. There is no merit in the Appeal. The Appeal is dismissed. No order as to costs.
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