Bank Of Maharashtra vs Videocon Industries Limited & Ors

National Company Law Appellate Tribunal5 January 2022

CitationCompany Appeal (AT) (Ins.) No. 503 of 2021

Ratio decidendi

The rule this decision rests on

The Tribunal, having been asked to address the ratio of the decision, finds that the reasoning in the judgment rests on the following propositions: A Committee of Creditors, having power to approve a resolution plan under Section 30(4) of the Code, also has power to reconsider and review its own approval before the plan is finally implemented, and the Adjudicating Authority or the Appellate Tribunal may remit the plan to the CoC for such reconsideration where the plan does not comply with Section 30(2)(b) read with Section 31. The Adjudicating Authority's power under Section 31(1) is confined to satisfying itself that the plan approved by the CoC meets the requirements of Section 30(2); it cannot itself modify the plan's terms, such as the mode of payment to dissenting financial creditors, and where a plan falls short of those requirements the proper course is to remit it to the CoC rather than to amend it. A resolution plan that fails to provide dissenting financial creditors with payment not less than their liquidation entitlement under Section 53(1), as required by Section 30(2)(b), is not in accordance with Section 31 and cannot be approved; its approval by the CoC and the Adjudicating Authority is liable to be set aside and the matter remitted to the CoC. The commercial wisdom of the CoC is not a bar to such remission, since the statutory compliance requirements of Section 30(2) and the proviso to Section 31(4), including prior competition approval where the plan involves a combination, are matters of law outside that commercial wisdom. A claim for reconsideration of a rejected Section 12A withdrawal proposal, or a challenge to the non-inclusion of assets of subsidiaries in the consolidated CIRP, is not a ground on which this judgment grants relief; the appeal of the ex-promoter seeking such relief is dismissed.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

NATIONAL COMPANY LAW APPELLATE TRIBUNAL,PRINCIPAL BENCH, NEW DELHICompany Appeal (AT) (Ins.) No. 503 of 2021IN THE MATTER OF:

Bank of Maharashtra Stressed Asset Management Branch Janmangal 4th Floor, 45/47, Mumbai Samachar Marg, Opposite to Stock Exchange, Fort, Mumbai - 400 001 Through its General Manager, Mrs. Chitra Datar Zonal Manager Delhi ...Appellant

Vs.

1.Videocon Industries Ltd. ...Respondent No.1

2.Videocon Telecommunications Limited ...Respondent No.2

3.Evans Fraser & Company (India) Limited ...Respondent No.3

4.Millennium Appliances (India) Limited ...Respondent No.4

5.Applicomp India Limited ...Respondent No.5

6.Electroworld Digital Solutions Limited ...Respondent No.6

7.Techno Kart India ...Respondent No.7

8.Century Appliances Limited ...Respondent No.8

9.Techno Electronics Limited ...Respondent No.9

10.Value Industries Ltd. ...Respondent No.10

11. PE Electronics Ltd ...Respondent No.11

12. CE India Ltd. ...Respondent No.12

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 1 of 213 13.Sky Appliances Ltd. ...Respondent No.13 All aforesaid Respondent Nos. 1-13 Through their Resolution Professional, Mr. Abhijit Guhathakurta, Flat No.701, A Wing, Satyam Springs, CTS No. 272A/2/1, Off BSD marg, Deonar, Mumbai, City, Maharashtra - 400 088 And having his CIRP Correspondence address at Deloitte Touche Tohmatsu India LLP Indiabulls Finance Centre, Tower 3, 27th Floor, Senapti Bapat Marg, Elphinstone Road (West), Maharashtra 400 013

14. Committee of Creditors of the Consolidated CIRP of Resolution Process of Videocon Group Companies as Consolidated by order dated 08th August, 2019 Through State Bank of India being The Lead Member of the CoC; ...Respondent No.14

15.Twinstar Technologies Limited 3rd Floor, IFFCO Tower, Pl No.3, Sector 39, Gurugram, Gurgaon, Haryana - 122 002, India ...Respondent No.15

Present: For Appellant: Mr. Vikas Singh, Sr. Advocate, Ms. Garima Prashad, Sr. Advocate Mr. Chaitanya B. Nikte, Mr. Ayush Negi, Mr. Rajiv K. Virmani, Mr. Abhinav Agrawal, Mr. Prakash Singh, Mr. Prasad Sarvankar, Mr. Sumedh Ruikar, Mr. Gaurav Jain, Mr. Atul Malhotra, Mr. Karan Valecha, Ms. Sneha Bhange, Advocates for Appellant Bank of Maharashtra

For Mr. Abhinav Vasisht, Senior Advocate with Mr. Respondents: Anoop Rawat, Ms. Meghna Rajadhyaksha, Mr.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 2 of 213 Zeeshan Khan, Mr. Vaijayant Paliwal, Ms. Radhika Indapurkar, Ms. Mohana Nijhawan, Mr. Chaitanya Safaya, Mr. Bryan Pillai, Ms. Moulshree Shukla, Ms. Ishani Mookherjee, Ms. Priya Singh, Mr. Ameya Gokhale, Advocates for R1 to 13

Mr. Tushar Mehta, Solicitor General of India with Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms. Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful Goyal, Advocates for R-14, COC.

Mr. Harish Salve, Sr. Advocate, Mr Gopal Jain, Senior Advocate, Mr Diwakar Maheshwari, Advocate and Mr Shreyas Edupuganti, Advocate for R-15.

With

Company Appeal (AT) (Ins.) No. 505 of 2021

IN THE MATTER OF:

IFCI Ltd. Financial Creditor, (A Government of India Undertaking) A Company registered under the Companies act, 1956 having its registered Office at: IFCI Tower, 61, Nehru Place, New Delhi ...Appellant

Vs.

1.Videocon Industries Ltd. ...Respondent No.1

2.Videocon Telecommunications Limited ...Respondent No.2

3.Electroworld Digital Solutions Limited ...Respondent No.3

4.Value Industries Limited ...Respondent No.4

5.Techno Kart India Limited ...Respondent No.5

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 3 of 213 6.Applicomp India Limited ...Respondent No.6

7.Sky Appliances Limited ...Respondent No.7

8. Techno Electronics Limited ...Respondent No.8

9. Millennium Appliances(India) Ltd ...Respondent No.9

10.Century Appliances Ltd. ...Respondent No.10

11. Evans Fraser & Company(India) Ltd. ...Respondent No.11

12. PE Electronics Ltd. ...Respondent No.12

13.CE India Ltd. ...Respondent No.13 All aforesaid Respondent Nos. 1-13 Through their Resolution Professional, Mr. Abhijit Guhathakurta, Deloitte Touche Tohmatsu India LLP Indiabulls Finance Centre, Tower 3, 27th Floor, Senapti Bapat Marg, Elphinstone Road (West), Maharashtra 400 013

15.Twinstar Technologies Limited 3rd Floor, IFFCO Tower, Pl No.3, Sector 39, Gurugram, Gurgaon, Haryana - 122 002, India ...Respondent No.15

Present:

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 4 of 213 For Appellant: Mr. Vikas Singh, Sr. Advocate, Mr. Tanuj Sud, Mr. Ajay Kumar, Ms. Harshita Ahluwalia, Advocates

For Mr. Abhinav Vasisht, Senior Advocate with Mr. Respondents: Anoop Rawat, Ms. Meghna Rajadhyaksha, Mr. Zeeshan Khan, Mr. Vaijayant Paliwal, Ms. Radhika Indapurkar, Ms. Mohana Nijhawan, Mr. Chaitanya Safaya, Mr. Bryan Pillai, Ms. Moulshree Shukla, Ms. Ishani Mookherjee, Ms. Priya Singh, Mr. Ameya Gokhale, Advocates for R1 to 13

Mr. Tushar Mehta, Solicitor General of India with Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms. Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful Goyal, Advocates for R-14, COC.

Mr. Harish Salve, Sr. Advocate Mr Gopal Jain, Senior Advocate, Mr Diwakar Maheshwari, Advocate and Mr Shreyas Edupuganti, Advocate for R-15.

With

Company Appeal (AT) (Ins.) No. 529 of 2021

IN THE MATTER OF:

Small Industries Development Bank of India SIDBI Towers, 15, Ashok Marg, Lucknow - 226 001 Through its Assistant General Manager, Mr. Mukesh Kumar ...Appellant

Vs. 1.Videocon Industries Ltd. ...Respondent No.1

2.Videocon Telecommunications Limited ...Respondent No.2

3.Evans Fraser & Company (India) Limited ...Respondent No.3

4.Millennium Appliances (India) Limited ...Respondent No.4

5.Applicomp India Limited ...Respondent No.5

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 5 of 213 6.Electroworld Digital Solutions Limited ...Respondent No.6

7.Techno Kart India ...Respondent No.7

8.Century Appliances Limited ...Respondent No.8

9.Techno Electronics Limited ...Respondent No.9

10.Value Industries Ltd. ...Respondent No.10

11. PE Electronics Ltd ...Respondent No.11

12. CE India Ltd. ...Respondent No.12

13.Sky Appliances Ltd. ...Respondent No.13 All aforesaid Respondent Nos. 1-13 Through their Resolution Professional, Mr. Abhijit Guhathakurta, Flat No.701, A Wing, Satyam Springs, CTS No. 272A/2/1, Off BSD marg, Deonar, Mumbai, City, Maharashtra - 400 088 And having his CIRP Correspondence address at Deloitte Touche Tohmatsu India LLP Indiabulls Finance Centre, Tower 3, 27th Floor, Senapti Bapat Marg, Elphinstone Road (West), Maharashtra 400 013

15.Twinstar Technologies Limited 3rd Floor, IFFCO Tower, Pl No.3, Sector 39, Gurugram, Gurgaon,

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 6 of 213 Haryana - 122 002, India ...Respondent No.15

Present: For Appellant: Mr. Vikas Singh, Sr. Advocate, Mr. Chaitanya B. Nikte, Mr. Ayush Negi, Mr. Prasad Sarvankar, Mr. Sumedh Ruikar & Ms. Sneha Bhange, Advocates for appellants

Mr. Tushar Mehta, Solicitor General of India with Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms. Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful Goyal, Advocates for R-14, COC.

Mr. Harish Salve, Sr. Advocate Mr Gopal Jain, Senior Advocate, Mr Diwakar Maheshwari, Advocate and Mr Shreyas Edupuganti, Advocate for R-15.

With Company Appeal (AT)(Insolvency) No. 545 of 2021

In the matter of:

Electrolux Home Products Inc. 1, Fusionopolis Place, #07-10, Galaxis, Singapore - 138522 ....Appellant Vs. 1. Videocon Industries Ltd. Through its Resolution Professional Centre, Off Mahakali Caves Road, MIDC, Marol Bus Depot, Andheri (E), Mumbai - 400 093 ...Respondent No.1 2. Twin Star Technologies Limited,

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 7 of 213 3rd Floor, IFFCO Tower, Plot No.3, Sector 29 Gurugram, Harayana - 122 002 ...Respondent No.2

Present: For Appellants: Mr. Nakul Dewan, Sr. Advocate with Mr. Rajendra Barot Ms. Neerja Balakrishnan, and Ms. Apoorva Gupta, Advocates.

For Respondent: Mr. Abhinav Vasisht, Sr. Advocate Ms. Meghna Rajadhyaksha with Ms. Radhika Indapurkar, Mr. Vaijayant Paliwal, Mr. Bryan Pillai, Mr. Anoop Rawat, Mr. Zeeshan Khan, Ms. Moulshree Shukla, Ms. Priya singh, Ms. Ishani Mookherjee Advocates for RP, R-1.

Mr. Gopal Jain, Sr. Advocate with Mr. Diwakar Maheshwari, Mr. Karan Mehta and Ms. Shreyas Edupuganti, Advocates for R-2.

Mr. Tushar Mehta, Solicitor General, with Biswajit Dubey, Ms. Surabhi Khattar and Mr. Madhav Kanoria Mr. Kanu Agarwal and Mr. Prafful Goyal Advocates for COC.

With

Company Appeal (AT) (Ins.) No. 650 of 2021

IN THE MATTER OF:

Venugopal Dhoot R/o Dhoot Bungalow Station Road, Aurangabad - 431 001 ...Appellant

Vs.

1. Abhijit Guhathakurta Resolution Professional of Videocon Industries Ltd

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 8 of 213 Videocon Telecommunications Ltd Evans Fraser & Co. (India) Ltd. Millennium Appliances (India) Ltd. Applicomp (India) Ltd. Electroworld Digital Solutions Ltd. Techno Kart India Ltd. Century Appliances Ltd. Techno Electronics Ltd. Value Industries Ltd. PE Electronics Ltd. CE India Ltd. Sky Appliances Ltd Address: Unit No.502, kaatyayni Business Centre Off Mahakali Caves Road, MIDC, Marol Bus Depot Andheri (E), Mumbai, 400 093 ...Respondent No.1

2.Committee of Creditors Videocon Industries Ltd Videocon Telecommunications Ltd Evans Fraser & Co. (India) Ltd. Millennium Appliances (India) Ltd. Applicomp (India) Ltd. Electroworld Digital Solutions Ltd. Techno Kart India Ltd. Century Appliances Ltd. Techno Electronics Ltd. Value Industries Ltd. PE Electronics Ltd. CE India Ltd. Sky Appliances Ltd. Through their counsel Cyril Amarchand Mangaldas ...Respondent No.2

3.Twinstar Technologies Limited Resolution Applicant 3rd Floor, IFFCO Tower, Pl No.3, Sector 39, Gurugram, Gurgaon, Haryana - 122 002, India ...Respondent No.3

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 9 of 213 Present: For Appellant: Mr. Arun Kathpalia, Sr. Adv. & Mr. Krishnendu Datta, Sr. Adv. with Mr. Sandeep S Ladda, Advocate & Mr. Yashvardhan, Advocate for the Appellant

For Respondents: Mr. Abhinav Vasisht, Senior Advocate with Mr. Anoop Rawat, Ms. Meghna Rajadhyaksha, Mr. Zeeshan Khan, Mr. Vaijayant Paliwal, Ms. Radhika Indapurkar, Ms. Mohana Nijhawan, Mr. Chaitanya Safaya, Mr. Bryan Pillai, Ms. Moulshree Shukla, Ms. Ishani Mookherjee, Ms. Priya Singh, Mr. Ameya Gokhale, Advocates for R1

Mr. Tushar Mehta, Solicitor General of India with Mr. Bishwajit Dubey, Mr. Madhav Kanoria, Ms. Surabhi Khattar, Mr. Kanu Agarwal, Mr. Prafful Goyal, Advocates for R-2

Mr Gopal Jain, Senior Advocate, Mr Diwakar Maheshwari, Advocate and Mr Shreyas Edupuganti, Advocate for R-3

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 10 of 213

J U D G M E N T

DR. ASHOK KUMAR MISRHA, TECHNICAL MEMEBR

Contents:

SL Particulars Para No. Page No.

No.

A. Brief Background 04-08 12-16

B. Submissions by the parties 09-18 17-174

C. Analysis of facts, law and 19-49 174-212

reasons

D. Conclusion 50 213

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 11 of 213

1. All these appeals have been filed by the 'Appellants' under Section 61

of the 'Insolvency and Bankruptcy Code, 2016' (in short 'Code') against

the impugned order dated 08.06.2021 passed by the 'Adjudicating

Authority' (National Company Law Tribunal, Mumbai Bench, Court

No.II at Mumbai) in IA No. 196/2021 in CP (IB) No. 02/MB/C-II/2018

and CP (IB) 01/MB/C-II/2018 and CP (IB) 508/MB/C-II/2018 and CP

(IB) 509/MB/C-II/2018 and CP (IB) 507/MB/C-II/2018 and CP (IB)

511/MB/C-II/2018 and CP (IB) 510/MB/C-II/2018 and CP (IB)

562/MB/C-II/2018 and CP (IB) 512/MB/C-II/2018 and CP (IB)

560/MB/C-II/2018 and CP (IB) 528/MB/C-II/2018 and CP (IB)

564/MB/C-II/2018 and CP (IB) 563/MB/C-II/2018 wherein the

'Adjudicating Authority' has approved the 'Resolution Plan' submitted

by 'Resolution Applicant' - 'Twin Star Technologies Limited'.

2. Since all these appeals have sought basically to quash and set aside the

impugned order dated 08.06.2021 of the Adjudicating Authority, it was

thought fit and proper to be heard together and disposed off by a

common judgment. Accordingly, we are proceedings in the matter.

3. Vide order dated 19.07.2021, this Tribunal has stayed the impugned

order and directed status quo ante as before passing of the impugned

order to be maintained. Resolution Professional will continue to manage

the Corporate Debtor as per provisions of the Code.

A. Brief background

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 12 of 213

4. The available record reveals that 'Videocon Group' was founded in the

year 1984 and commenced its business from Marathwada region which

expanded across India and worldwide. In the initial stage, this group

was involved in local television manufacturing. The same was

diversified in multiple business portfolio in oil and gas, retail, telecom,

insurance and real estate sector. The 'Videocon Industries Limited' (VIL)

is a listed company on the 'National Stock Exchange' (NSE) and the

'Bombay Stock Exchange' (BSE) with its promoter group holding

62.27% share. A 'consortium of bankers' led by 'State Bank of India'

(SBI) has rendered its financial debt facilities to the Videocon group. It

is also observed that the Videocon's telecom business obtained 21, 2G

telecom licenses from the then prevailing government which was

cancelled at a later date and this impacted the Videocon's Telecom

business. They were repaying the agreed instalments to the consortium

of lenders till 2015. VIL and 'Bharat Petroleum Corporation Limited'

jointly bought oil and gas assets through "joint venture". It also reflects

that from May, 2016, the VIL alongwith 13 others companies of

Videocon groups were classified as 'SMA - 2' due to late payment of

instalments in the year 2016 onwards.

5. It is also reflected from the 'Appeal Paper book' that VIL and its

other group companies (12 domestic subsidiary) and their lenders

entered into a 'Syndicated Rupee Term Loan Agreement' dated

08.08.2012 as-obligor - co-obligator on the one hand and the banks

and financial institutions as the group of lenders with SBI as

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 13 of 213 Facility Agent and SBICaps Trustee Company Limited as the

onshore Security Trustee. Entities of Videocon group with respective

orders were under CIRP and the action taken by the lead bank i.e. SBI

under Section 7 of the Code and few companies who are also part of the

group, certain 'Operational Creditors' (OC) had filed insolvency petition.

List of 13 Videocon group companies taken from Form- H- Compliance

Certificate given by RP at 70 of the Appeal paper book in CA(AT) (Ins)

No. 505 of 2021.

Table - 1

Sl Name of the Insolvency Date of Date of No Videocon group commencemen appointmen appointmen . company t date t of the IRP t of RP 1. Videocon 11.06.2018 11.06.2018 10.07.2018 Telecommunication s limited 2. Electroworld Digital 30.08.2018 30.08.2018 10.10.2018 Solutions Ltd 3. Value Industries Ltd 30.08.2018 30.08.2018 06.10.2018 4. Evans fraser & Co. 30.08.2018 30.08.2018 10.10.2018 (India) Ltd. 5. CE India Ltd 14.09.2018 14.09.2018 20.10.2018 6. Videocon Industries 06.06.2018 06.06.2018 10.07.2018 Limited 7. Millennium 31.08.2018 31.08.2018 10.10.2018 Appliances (India) Ltd 8. Sky Appliances Ltd. 31.08.2018 31.08.2018 11.10.2018 9. PE Electronics Ltd. 31.08.2018 31.08.2018 09.10.2018 10. Techno Electronics 31.08.2018 31.08.2018 09.10.2018 Ltd. 11. Applicomp India Ltd 25.09.2018 25.09.2018 31.10.2018 12. Techno Kart India 25.09.2018 25.09.2018 30.10.2018 Ltd 13. Century Appliances 25.09.2018 25.09.2018 30.10.2018 Ltd.

It also reveals from Form -H that Mr. Abhijit Guhathakurta was

appointed as the RP for the Corporate Debtor(CD) from 25.09.2019 by

the Adjudicating Authority. SBI had filed an application for substantive Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 14 of 213 consolidation (being Miscellaneous Application No.1306 of 2018 before

the Adjudicating Authority). Mr. Venugopal Dhoot, who is the

guarantor, shareholder/former Managing Director and Chairman of VIL

also filed an application for substantive consolidation (being MA

No.1416 of 2018 before the Adjudicating Authority).

The Adjudicating Authority vide its order dated 08.08.2019 passed the

consolidation order and partially allowed SBI's Application and directed

consolidation of the CDs (Corporate Debtors) (as per Table No.1) out of

the 15 Videocon Group companies. CIRP of two companies i.e 'KAIL

Limited' and 'Trend Electronics Limited' to run independently.

6. As per information available in CA(AT) (Ins) No. 503/2021, page 14 of

the Appeal paper book, total claims of Rs.72,078.5 Crore has been filed

out of which claims of Rs.64,637.6 Crore had been verified and accepted

for the purpose of CIRP by the RP. It was stated that the plan provides

for a meagre amount of Rs.2962.02 Crore against an admitted liability

of approx. Rs.65,000 Crore. The said waiver is almost Rs.62,000 Crore

of admitted claims & Rs.69,000 crore of total claims whereby this public

money is lost, haircut is approx. over 95%. Even the claims of the

Financial Creditors have been settled below 5% while that of OC

(Operational Creditor) is hardly 0.72%.

7. It is also revealed that the Resolution Plan of 'Successful Resolution

Applicant' (SRA) was approved by the CoC by 95.09 % voting share.

However, the 'Assenting Financial Creditors' (AFC) constituting

94.98%, who have approved the Resolution Plan submitted by the SRA

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 15 of 213 has filed an affidavit stating that they feel duty bound to reconsider

their decision in larger public interest resulting from unprecedent

haircut of 95% & observations of the Adjudicating Authority as also this

Appellate Tribunal while granting interim stay on the impugned order

dated 08.06.2021 at the hearing on 19.07.2021 observing the followings

stated hereafter.

"14. Considering the observations of the Adjudicating

Authority and the submissions made by the Learned Sr.

Counsel for Appellants in both these Appeals and the grounds

raised in these Appeals, and considering the exceptional facts

of present matter the Impugned Order is stayed till the next

date and status quo ante as before passing of the Impugned

Order is directed to be maintained. Resolution Professional

will continue to manage the Corporate Debtors as per

provisions of IBC till the next date".

8. AFC have accepted that proceedings with the implementation of the

Resolution Plan is not feasible in the light of above stated positions. No

law debars review of decision in the executive branch as also in

commercial company law matters to review its own decisions if at a later

stage reveals that either in the interest of the organization or in the

public interest or observations of the concerned Adjudicating

Authority/Appellate Authority. AFC are of the view that power to

approve includes power to vary, modify and reconsider. While the SRA

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 16 of 213 has stated that after approval of resolution plan, CoC is functus officio

and cannot review the same.

B. Submission by the parties.

Company Appeal (AT) (Ins) No. 503 of 2021:

9. Submission of the Appellant Bank

i. Ld. Sr. Counsel for the Appellant (Dissenting Financial Creditor)

has elaborately submitted that the 'Resolution Plan' provides

towards the Appellant bank less than the liquidation value which

the bank will receive otherwise and accordingly, it is against the

provisions of the Code, specifically Section 30 of the Code. A

figure was provided by 'SBI Caps' ('Process Advisor') for the

Appellant bank, in case of liquidation value was Rs. 41.85 Crore

and if it dissents then the 'Financial Creditor' will have to bear

the loss of Rs.17.42 Crore. The 'Resolution Professional' (RP) in

21st meeting of 'Committee of Creditor' (CoC) has confirmed the

Appellant Bank that there is no change in distribution calculation

as provided by SBI Caps (page 196 &197 of the Appeal paper

book). However, there is a discrepancy in the 'Form-H' (Resolution

Plan provisions page 51 of the Appeal Paper Book) and total

amount payable to dissenting 'Financial Creditor' is Rs.105.23

Crore whereas as per 'Distribution Sheet', it was Rs.114.21 Crore

(page 196 & 197 of the Appeal Paper Book).

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 17 of 213 ii. It was also submitted by the Ld. Sr. Counsel for the Appellant

bank that Section 30(2)(b) of the Code requires Resolution

Professional to confirm that the 'Dissenting Financial Creditor'

will get an amount, which shall not be less than the amount to

be paid to such creditors in the event of liquidation under Section

53 of the Code. From the above stated details, it is very much

clear that they are being paid less than the liquidation value. So

there is a non-compliance of the provisions of Section 30(2)(b) of

the Code. These inputs are provided by the 'Resolution

Professional' for decision making of CoC. However, this has been

belatedly violated in this case.

iii. It was also stated by the Ld. Sr. Counsel for the Appellant that

the 'Adjudicating Authority' has made observations and

directions to the CoC to make payments as per liquidation value

to all 'Dissenting Financial Creditors' in cash up-front. While the

Resolution Plan also envisages payment through 'Non-

Convertible Debenture' (NCD). These changes the nature of

the plan which requires reconsideration by the CoC

independently. They have also cited the judgment of Hon'ble

Supreme Court in Jaypee Kensington Boulevard Apartments

Welfare Associations & Ors. Vs. NBCC (India) Ltd. & Ors. in Civil

Appeal No.3395 of 2020 at para 126 to 130. The ld. Sr. Counsel

also stated that the said judgment of Hon'ble Apex Court has

specifically held that 'modification in payment is a commercial

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 18 of 213 aspect and falls within the exclusive domain and commercial

wisdom of the CoC and cannot be interfered. Such modification

is not permissible'.

iv. Clause 3.5 of the 'Resolution Plan' (appearing at page 237-238 of

the Appeal Paper Book) clearly reflects that the payment will also

be made by way of NCD and 'there is no whisper of cash'. The

Adjudicating Authority has no power to change the plan, it can

only be reviewed by the CoC.

v. It has also been submitted by the Ld. Sr. counsel for the Appellant

that there is no priority payment to 'Dissenting Creditors' as

these NCD are getting redeemed one day prior to the NCD

redemption of 'Assenting Financial Creditor'. This is in

violation of the scheme and the Code.

vi. The Ld. Sr. Counsel for the Appellant bank has also submitted

that the bid has come close to liquidation value and hence,

apparently "confidentiality clause" not maintained by the RP and

such large hair cut is result of this. It is unprecedented hair cut

for such a large organization comprising of 'Videocon Industries

Ltd.' and its 'other group companies' (12 Domestic Subsidiary)

with a very high claim amount of Rs.72078.5 Crore and admitted

claim amount of Rs.64637.6 Crore (appearing at page no.15 of

the Appeal paper book) whereas amount provided in the plan is

meagre Rs.2962.02 Crore. At page 52 of the paper book it reflects

that the amount provided to the amount claimed under the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 19 of 213 Resolution Plan on an overall basis is 4.15%. It means the

haircut is approximately 96%. Finally, it has submitted to

quash and set aside the said impugned order.

10. Submissions of the Respondent No.1 to 13 [Resolution Professional (RP)]:

i. The RP has briefly submitted that he has preserved and protected

the priority status to 'Dissenting Financial Creditor'. He has also

submitted that NCD issued to 'Dissenting Financial Creditor'

shall be redeemed before NCD issued to 'Assenting Financial

Creditor'. He has also stated that the Resolution Applicant

provides for the purpose of computation of liquidation value only

the upfront amount and the NCD proposed to be issued. The

'Dissenting Financial Creditors' are not being issued equity

shares. At the relevant time, NCD were proposed to be issued to

the Dissenting Financial Creditor and the same was found to be

in compliance to the Code and the CIRP regulation as per law as

applicable at that time. He has also stated that the Resolution

Plan will be in accordance with 'Jaypee Kensington' as stated

supra as the same was not available at that time. It is a settled

law that commercial wisdom of the CoC is paramount and cannot

be assailed. He has also stated that he is not responsible for

compliance for SBI Caps suggestions for a particular modalities

of distributions as they are the 'Process Advisor' of the CoC. He

has also done valuation through two valuers registered with

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 20 of 213 'IBBI'. The distribution mechanism is said to have been done

assuming that all 'Financial Creditors' will vote in favour of the

'Resolution Plan' and done prior to completion of voting. The

distribution suggested by SBI Caps was not put vote to the CoC.

What is to be paid to 'Dissenting Financial Creditors' is in 'Form

-H' which has been submitted alongwith the plan and the same

can only be paid on the approval of the CoC.

ii. It is also stated by the RP that he was not in a position to

determine the exact amount payable to the Appellant prior to the

date of actual payment in view of eventualities that could arise.

(Para 11 of Written Submission of the RP dated 17.09.2021 vide

diary no.29811).

iii. It is also stated by the RP that 'Dissenting Financial Creditors'

can be paid in cash (para IV page 13 of the RP reply). He has also

stated that the Resolution Plan was in compliance with the

applicable provisions of the Code and the CIRP Regulations and

there was no reason or occasion that the same should be sent

back for reconsideration to the CoC.

11. Submissions of the Respondent No.15/Successful Resolution Applicant (SRA):

i. The 'Successful Resolution Applicant' (SRA) has briefly submitted

that they are making upfront payment of Rs.200 Crore to

'Financial Creditors', Rs.2700 Crore NCD to Financial Creditor

carrying an annual interest coupon of 6.65% etc., redeemable in

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 21 of 213 five instalments next six years from closing date in instalments

(page 212 of the Appeal Paper Book).

ii. It has also stated that the CoC has approved the Resolution Plan

of SRA (dated 07.11.2020) on 12.12.2020 with a vote of 95.09 %.

They have also submitted the following Financial Creditors have

dissented against the Resolution Plan:

 Bank of Maharashtra (BOM) being the Appellant herein,

holding 1.97% voting share in CoC;

 IFCI Limited (IFCI), holding 1.03% voting share in CoC;

 Small industries Development Bank of India (SIDBI),

holding 0.053% voting share in CoC;

 ABG Shipyard Limited, holding 0.024% voting share in

CoC.

iii. It has also stated that the SRA has filed an application for

approval of Resolution Plan on 15.12.2020 and the same has

been decided by the Adjudicating Authority on 08.06.2021. While

the judgment of Hon'ble Supreme Court in 'Jaypee Kensington'

as stated supra has been pronounced on 24.03.2021. In the

meantime, the Appellant has filed IA No. 982 of 2021 in CP (IB)

No. 02/MB/C-II/2018 before the Adjudicating Authority alleging

that 'Resolution Plan' contravenes Section 30(2) of the Code. The

matter has gone to 'Hon'ble Supreme Court' by filing 'Civil Appeal

No. 4626 of 2021' by 'Resolution Applicant' which has directed to

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 22 of 213 this 'Appellate Tribunal' to decide the Appeal on the next date of

hearing i.e. 07.09.2021.

iv. The SRA has stated that the amount in Form -H is an estimated

amount and the final amount be determined at the time of payout

which is T+ 44th day, with T being the date of approval of plan by

the Adjudicating Authority. It is the commercial wisdom of the

CoC to provide the hair cut of 95.05% and it is not available to

judicial review. Citied multiple judgments as are enunciated

below:

 K.Sashidhar Vs. Indian Overseas Bank 2019) 12 SCC 150;

 Committee of Creditors of Essar Steel India Limited Vs.

Satish Kumar Gupta (2020) SCC 531;

 Jaypee (Supra);

 Kalpraj Dharamshi Vs. Kotak Investment Advisors CA No.

2943 of 2020 and

 Ebix Singapore Private Limited Vs. Committee of Creditors

of Educomp Solutions Limited CA No. 3224 of 2020

v. It has also stated that equitable considerations cannot influence

the approval of the Resolution Plan, once the same has been

approved by the CoC. It has also stated that the Resolution Plans

and liquidation value relationship is relevant in view of the data

available on the IBBI Website as on 30.06.2021.

 Till date (upto 30th June 2021) only 393 CIRP processes

yielded resolution plans;

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 23 of 213  177 resolution plans out of 393 i.e.45% resolutions have

had a realization which is 1.25 times the liquidation value

or less; (Twin Star Resolution Plan was at a valuation of

1.25 times the liquidation value for 100% equity (92% stake

of RA extrapolated to 100% as 8% equity is offer to

Financial Creditors under the plan)

 82 resolution plans out of 393 resolutions i.e. 21%

resolutions have had a realization below the liquidation

value;

 There are 11 approved resolution plans (out of 393) where

the resolution value is between 99% and 101% of the

Liquidation value;

 There are 74 approved resolution plans (out of 393) where

the resolution value is between 90% and 110% of the

Liquidation value.

vi. The Appellant is comparing admitted claim to the resolution plan

value whereas it is to be compared with reference to liquidation

value.

vii. It was also pointed out by the SRA that CoC becomes functus-

officio once it approves the 'Resolution Plan' and hence once they

approve the 'Resolution Plan' then it cannot be sent back to them

for their review.

12. Submissions of the Committee of Creditors of Consolidated

Videocon Group of Companies. 'The Ld. Solicitor General' (SG) on

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 24 of 213 behalf of certain Assenting Financial Creditors(AFC) constituting

94.98% (out of 95.09% of the CoC who assented the proposed) of

the CoC of the Consolidated Videocon Group of Companies have

made the following submissions:

i. It was submitted by the Ld. SG that the 'Assenting Financial

Creditors' has filed an 'Affidavit' on behalf of 'Assenting

Financial Creditors' stating the followings:

a. The Assenting Financial Creditors on whose behalf the

Affidavit is filed carry a voting percentage of 94.98% of the

CoC, who have approved the Resolution Plan submitted by

Twin Star Technologies Limited- R14 in accordance with the

provisions of the Code and the same was approved by the

Adjudicating Authority vide its impugned order.

b. Under the scheme of the Code and the Regulations framed

thereunder, the RP is required to appoint two valuers to

determine the fair value and liquidation value of the

Corporate Debtor. The RP is required to disclose the same to

the CoC after receipt of Resolution Plan.

c. The RP have originally received 11 Resolution Plans for the

CD and out of that he has certified two Resolution Plan as

compliance under the Code and accordingly, the same was

put to vote and the Resolution Plan under challenge of 'Twin

Star(R15) was approved by the CoC by 95.09% voting share.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 25 of 213 d. The Adjudicating Authority has also made certain

observations regarding low value of the Resolution Pan and

the hair cut being suffered by various classes of

'stakeholders' as stated in para 5 & 6 of the impugned order

dated 08.06.2021 and the same is also depicted below:

"OBSERVATIONS OF THE ADJUDICATING AUTHORITY

Para -5. As per the CoC approved Resolution Plan,

Assenting Secured Financial Creditors would get only

4.89%, Dissenting Secured Financial Creditors would

get only 4.56%, Assenting Unsecured Financial

Creditors would get only very meagre amount of 0.62%,

Dissenting Unsecured Financial Creditors would get

"NIL/ ZERO" amount and Operational Creditors would

also get a very meagre amount of only 0.72%. Out of total

claim amount of Rupees 71,433.75 Crore, claims admitted are

for Rs 64,838.63 Cores and the plan is approved for an

amount of only Rs 2962.02 Crore which is only 4.15% of the

total outstanding claim amount and the total hair cut to all the

creditors is 95.85%. Therefore, the Successful Resolution

Applicant is paying almost nothing and 99.28% hair cut is

provided for Operational Creditors (Hair cut or Tonsure, Total

Shave). During the Course of hearing it is also submitted that

voluminous number of Operational Creditors are also MSME

and if they are paid only 0.72 % of their admitted claim

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 26 of 213 amount, in the near future many of these Operational

Creditors may have to face Insolvency Proceedings which

may be inevitable, therefore this Adjudicating Authority

suggests, requests both CoC and the Successful Resolution

Applicant to increase the pay-out amount to these Operational

Creditors especially MSMEs as this is the First Group

Consolidation Resolution Plan of 13 companies having large

number of MSMEs.

Para - 6. Further it is also observed that by just paying only

Rs. 262 Cores (8.84% of total plan value) (Cash balance

available with the Corporate Debtors is approx. Rs. 200 Crore)

the Successful Resolution Applicant will get possession of all

the 13 Corporate Debtors to run these units and the first

payment of Rs. 200 Crore as part redemption amount of NCDs

will be paid within 25 months from the closing date and the

balance amount of Rs.6,25,00,00,000/ each is spread over in

4 instalments starting from 3rd year onwards up to sixth year

from the closing date and the interest rate for the NCDs is also

a nominal of only 6.65% p.a payable annually. It may also be

noted that at the time of granting loan, restructuring,

approving the resolution plan with such a huge hair cut also

the financial institutions, Committee of Creditors consisting 35

members exercised their Commercial Wisdom. Since this is

the Commercial Wisdom of the COC and as per the various

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 27 of 213 judgements of the Hon'ble Supreme Court and by following

the judicial precedents, discipline the Adjudicating Authority

approves the resolution plan of the Successful Resolution

Applicant with a suggestion, request to both CoC and the

Successful Resolution Applicant to increase the pay-out

amount to these Operational Creditors especially MSMEs."

e. This Tribunal while granting interim stay on the impugned

order on 19.07.2021 made the following observations:

"14. Considering the observations of the Adjudicating

Authority and the submissions made by the Learned Sr.

Counsel for Appellants in both these Appeals and the grounds

raised in these Appeals, and considering the exceptional facts

of present matter the Impugned Order is stayed till the next

date and status quo ante as before passing of the Impugned

Order is directed to be maintained. Resolution Professional

will continue to manage the Corporate Debtors as per

provisions of IBC till the next date".

f. In the present appeal, assertions have been made by the

'Dissenting Financial Creditors' about Non-Discloser of their

respective share of the liquidation value which has resulted

in them not being able to take a proper and prudent decision

had they been knowing so they could have persuaded the

Assenting Financial Creditors not to accept the Resolution

Plan with such unprecedented huge haircut. This has

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 28 of 213 necessitated a reconsideration by the CoC of the decision to

accept the haircut of 95%. Considering the observations of

the Adjudicating Authority and this Appellate Tribunal,

Assenting Financial Creditor (AFC) majority of which are

public sector banks and Financial institutions dealing with

public money have to give serious consideration and

weightage to the observations. Accordingly, in the fitness of

thing, AFC has proposed to reconsider its decision in larger

public interest so as to ensure that the public money is

secured and maximized in the best possible manner. This is

a peculiar fact of this case and requires reconsideration by

certain AFC, particular, public sector banks and financial

institutions. They have requested this Appellate Tribunal

to remand the matter back to the CoC for its

reconsideration including authorization after the

reconsideration by the CoC to inter alia allow the CoC

and the RP after the reconsideration of the CoC to

conduct a fresh process of the inviting fresh 'Expression

of Interest' (EoI) and 'Fresh Resolution Plan' from all

interested Resolution Applicants or to take appropriate

decisions including liquidation of the corporate debtors, if

approved, by the CoC as per provisions of Code.

g. The AFCs have further submitted that proceedings with the

implementation of the current Resolution Plan seems not

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 29 of 213 feasible and they are accepting that the same is not

consistent with the observations made by the Adjudicating

Authority and this Appellate Tribunal and also considering

the various issues presented in the current appeals. All this

has made them to believe that the AFC is duty bound to

reconsider their decision in larger public interest.

ii. The AFCs have significantly gone through the observation

made in the appeal paper book, observations of

Adjudicating Authority and this Appellate Tribunal and,

particularly, are concerned with no value of Resolution Plan

and the unprecedented haircut being suffered various

classes of the stakeholders including the MSME (which is

the backbone of the economy) and other operational

creditors under the Resolution Plan. The Assenting

Financial Creditors wants this to be placed before the full

CoC to reconsider its decision in larger public interest and

to ensure that public money and interest of stake holders

are properly protected and secured and maximized in the

best possible manner. They accept that there is a merit in

reconsideration inasmuch as Non-disclosure of their

respective share of the liquidation value may have resulted

in not substantiating their issue appropriately to take a

proper and prudent while approving the Resolution Plan. All

this have persuaded the AFC (which constituted 94.98% of

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 30 of 213 95.09% approving the plan) to accept the resolution plan with

such haircut. Let all the issues placed before the CoC to take a

balance view on such unprecedented haircut including certain

deficiencies in approving the Resolution Plan as observed by the

Adjudicating Authority and the Appellate Tribunal while

granting interim stay.

iii. They have further submitted that this Appellate Tribunal has

power to allow reconsideration of CoC's decision to approve a

resolution plan. In this regard, the Hon'ble Supreme Court

in the case of Jaypee Kensignton Boulevard Apartment

Welfare Association and others Vs. NBCC (India) limited and

Ors., 2021 SCC Online SC 253 has recently held that in case

a resolution plan requires modification, the Adjudicating

Authority (which would include this Appellate Tribunal by

virtue of the scheme of the Code) must send back the

resolution plan to the CoC to consider the modifications,

as so to afford an opportunity to the resolution applicant to

modify the plan, and CoC may then re-consider the plan and

vote upon the same. Relevant observations of the Hon'ble

Supreme Court in this regard is reproduced below:

"The submissions made on behalf of the IRP in this regard are

correct that if the Adjudicating Authority was of the view that the

plan did not meet with any particular requirement, it could have

only sent it back to the CoC to consider the proposed

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 31 of 213 modifications, so as to afford an opportunity to the resolution

applicant to modify the plan and to the CoC to reconsider and

vote upon the same."

iv. Thus, it has been made amply clear that the Adjudicating

Authority (and this Appellate Tribunal) has powers to send the

matter back to CoC for reconsideration. Thus, in the larger

public interest, and in light of the observations made by the

Adjudicating Authority and this Appellate Tribunal, the most

appropriate course of action would be to remand the matter

back to CoC for reconsideration. In any case, it has been time

and again affirmed that the CoC's commercial wisdom is

paramount by the Indian courts [K.Sashidhar Vs. Indian

Overseas bank & Ors., (2019) 12 SCC 150; Committee of

Creditors of Essar Steel India Ltd Vs. Satish Kumar Gupta &

Ors., (2020) 8 SCC 531; Kalpraj Dharmashi & Anr. Vs. Kotak

Investment Advisors Ltd., & Anr., 2021 SCC Online SC 204]

K.Sashidhar Vs. Indian Overseas bank & Ors., (2019) 12 SCC

150

"Besides, the commercial wisdom of the 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

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 32 of 213 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 the 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."

Committee of Creditors of Essar Steel India Ltd Vs. Satish

Kumar Gupta & Ors., (2020) 8 SCC 531

"It is clear that when the Committee of Creditors

exercises its commercial wisdom to arrive at a

business decision to revive the corporate debtor,

it must necessarily take into account these key

features of the Code before it arrives at a

commercial decision to pay off the dues of

financial and operational creditors. There is no

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 33 of 213 doubt whatsoever that the ultimate discretion of

what to pay and how much to pay each class or

sub- class of creditors is with the Committee of

Creditors, but, the decision of such Committee

must reflect the fact that it has taken into

account maximising the value of the assets of

the corporate debtor and the fact that it has

adequately balanced the interests of all

stakeholders including operational creditors.

This being the case, judicial review of the

Adjudicating Authority that the resolution plan

as approved by the Committee of Creditors has

met the requirements referred to in Section

30(2) would include judicial review that is

mentioned in Section 30(2)(e), as the

provisions of the Code are also provisions of law

for the time being in force. Thus, while the

Adjudicating Authority cannot interfere on

merits with the commercial decision taken by

the Committee of Creditors, the limited judicial

review available is to see that the Committee of

Creditors has taken into account the fact that

the corporate debtor needs to keep going as a

going concern during the insolvency resolution

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 34 of 213 process; that it needs to maximise the value of

its assets; and that the interests of all

stakeholders including operational creditors has

been taken care of. If the Adjudicating Authority

finds, on a given set of facts, that the aforesaid

parameters have not been kept in view, it may

send a resolution plan back to the Committee of

Creditors to re-submit such plan after satisfying

the aforesaid parameters. The reasons given by

the Committee of Creditors while approving a

resolution plan may thus be looked at by the

Adjudicating Authority only from this point of

view, and once it is satisfied that the Committee

of Creditors has paid attention to these key

features, it must then pass the resolution plan,

other things being equal."

Kalpraj Dharmashi & Anr. Vs. Kotak Investment Advisors

Ltd., & Anr., 2021 SCC Online SC 204

It has further been held, that 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. This Court thus, in unequivocal terms, held, that 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. It has been held,

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 35 of 213 that the opinion expressed by CoC after due deliberations in the meetings through voting, as per voting shares, is a collective business decision. It has been held, that the legislature has consciously not provided any ground to challenge the "commercial wisdom" of the individual financial creditors or their collective decision before the Adjudicating Authority and that the decision of CoC's 'commercial wisdom' is made non justiciable." ... This Court held that what is left to the majority decision of the

Committee of Creditors is the "feasibility and viability" of a

resolution plan, which obviously takes into account all aspects of

the plan, including the manner of distribution of funds among the

various classes of creditors. As an example, take the case of a

resolution plan which does not provide for payment of electricity

dues. It is certainly open to the Committee of Creditors to suggest

a modification to the prospective resolution 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

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 36 of 213 determine, through negotiation with the prospective resolution

applicant, as to how and in what manner the corporate resolution

process is to take place."

The report of the Bankruptcy Law Reforms Committee, Volume

I: Rationale and Design (November 2015) too had observed that

the business decision regarding appropriate disposition of a

defaulting company should be made solely by the CoC. The said

observation has even been relied upon by the Hon'ble Supreme

Court in the case of Kalpraj Dharamshi & Anr. Vs. Kotak

Investment Advisors Ltd. & Anr., 2021 SCC OnLine SC 204,

BlRC's relevant portion is reproduced below:

"The Committee believes that there is only one correct forum for

evaluation such possibilities, and making a decision: a creditors

committee, where all financial creditors have votes in proportion

to the magnitude of debt that they hold. In the past, laws in India

have brought arms of the government (legislature, executive or

judiciary) into this question. This has been strictly avoided by the

Committee. This appropriate disposition of a defaulting firm is a

business decision, and only the creditors should make it."

v. It is also submitted that, similarly, in the Insolvency Law

Committee Report, 2018, it was re-emphasized that "the

objective of the Code is to respect the commercial wisdom of the

CoC." The Hon'ble Supreme Court in K.Sashidhar referred to

the Report of 2018 and further affirmed that the CoC's

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 37 of 213 commercial wisdom is paramount. Thus, if the CoC in its

commercial wisdom considers it appropriate to have a

reconsideration of its decision, this Appellate Tribunal may

consider the same and remand the matter back to it in the

larger interest of all stakeholders and public money.

vi. Ld. SG has also stated that without prejudice CoC has the

power to approve or to reconsider a plan. It is trite that the

power to do also includes power to undo. It has been time and

again observed by the Courts in Indian that the power to make

an order includes power to add to, amend, vary or rescind the

said order as well. (see Dhikpathy Vs. Chairman Chennai Port

Trust, 2001 SCC OnLine Mad 154, Para 19). Recognizing the

inherent right, the Hon'ble Supreme Court too in the case of

Kamleshkumar Ishwardas patel Vs. Union of India, (1995) 4

SCc 51 (page 55) had observed that the authority making the

decision can also revoke it. Relevant paragraph is reproduced

below:

"Since the object and purpose of the representation that is to be

made by the person detained is to enable him to obtain relief at

the earliest opportunity, the said representation has to be made

to the authority which can grant such relief, i.e., the authority

which can revoke the order of detention and set him at liberty.

The authority that has made the order of detention can also

revoke it. This right is inherent in the power to make the order."

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 38 of 213 vii. The contention that the resolution plan once approved cannot

be reconsidered is untenable. Further, reference to the Hon'ble

Supreme Court judgement in Gujarat Urja Vikas Nigam Limited

Vs. Amit Gupta and Ors., 2021 SCC OnLine SC 194, to avert

that the Adjudicating Authority cannot do what the Code

consciously did not provide it the power to do, is also incorrect

and untenable.

viii. It is also submitted that the power to revoke the approval is

inherent within the power to approve to the CoC as well as the

Adjudicating Authority. The Code need not expressly state

powers, by way of separate provisions, which are understood to

be implied in the powers expressly provided under the Code.

Thus, the Adjudicating Authority and this Appellate Tribunal is

fully empowered under the Code to send the matter back to CoC

for reconsideration of its decision and the CoC is fully

empowered to reconsider its decision.

ix. It has also been stated by the Ld. SG the power to approve

includes power to vary, modify and reconsider. It is also a well-

settled principle of law that the power to take a decision, also

encompasses within it the power to modify, review and

reconsider such decision [see Duli Chand Vs. State of Uttar

Pradesh and Ors. Writ-C No. 45851 of 2011 (Allahabad High

Court; Kamal Kumar Vs. State of H.P. CWP No. 3443 of 2020

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 39 of 213 (HP High Court); and District Collector Vs. Bhaskara, Writ

Appeal No. 615 of 1982 (Kerala High Court)].

x. In this regard, observation of the Hon'ble Bombay High Court

in the case of Rajesh Hansraj Chopra Vs. the Competent

Authority & Ors., 2001 SCC OnLine Bom 1145 is very pertinent.

Its states:

"Section 21 of the General Clauses Act is a general provision how

to interpret provision of an enactment or regulation or rules where

certain powers are conferred on certain authority to issue an

order and the extent to which such power could be exercised. In

doing so, such authority is conferred with power to modify,

amend or to alter it."

xi. It is stated that the Hon'ble Supreme court judgment in the case

of Ebix Singapore Pvt. Ltd. Vs. CoC of Educomp Solutions

limited & Ors. in Civil AppealNo. 3224 of 2020 to avert that the

Resolution plan once approved, cannot be withdrawn is not

applicable to the instant fact situation. It is submitted that the

Ebix judgment decided the question of whether a successful

resolution applicant can withdraw/ seek modification of in a

CoC approved resolution plan, while an application for approval

is pending before the Adjudicating Authority. Ebix does not

consider CoC's power to reconsider a resolution plan, once

approved by it. Thus, the reliance on Ebix is misplaced and

ought to be rejected. Similar, reliance on Amtek Auto Limited

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 40 of 213 Vs. Dinkar T.Venkatsubramanian (2021) 4 SCC 457, is

incorrect as the said judgment pertains to withdrawal from the

resolution plan being sought by the resolution applicant.

Therefore, it is submitted that on a con-joint reading of the

established principle of law that power to do something also

includes the power to undo and the recognition of power to

remand the matter back to CoC for reconsideration in Jaypee,

it is prayed to remand the matter back to the CoC for its

reconsideration. This would enable CoC to take account of the

observations of the Adjudicating Authority and this Appellate

Tribunal positively and provide it with an opportunity to

safeguard interest of all stakeholders in the best possible

manner.

13. Company Appeal (AT) (Ins) No. 505 of 2021:

A.Submissions of the Appellant- IFCI Limited

I. The Ld. Counsel for the Appellant has stated that the Resolution

Plan is contrary to the provisions of the Code and the IBBI (CIRP

for Corporate Persons) Regulations, 2016 with respect to the

treatment provided to Appellant being a 'Dissenting Financial

creditors' (DFC). The payment to DFCs in the form of NCD is not

prescribed under law laid down as also the Resolution Plan lacks

non-payment of upfront as required under Section 30 R/w

Section 53 of Code.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 41 of 213 II. It is stated that Videocon Industries Limited (VIL) and its other

group companies and their lenders entered into a syndicated

Rupee Term Loan Agreement dated 08.08.2012 between VIL and

its 12 domestic subsidiaries as Obligor-Co-obligor on one hand

and the Banks and Financial Institutions as the group of

lenders, with the SBI as Facility Agent and SBICAP as the

Onshore Security Trustee. It is stated that vide letter dated

13.09.2013 the Appellant granted in principle agreement to

participate in the syndicated RTL Facility to provide loan not

exceeding Rs. 400 Crore to VIL. It is stated that the Appellant

became party to the RTL by Deed of Accession Dated

23.09.2013. the Appellant craves leave to produce the Rupee

Term Loan Agreement if required.

III. It is also stated that apart from the assets covered under the

Rupee Term Loan Agreement, the Appellant separately enjoys an

exclusive charge over a property. It is stated that the property is

specifically the land and buildings at the factory at SP-1 Vigyan

Nagar Industrial Area, Opp. RIICO Office, Shahjahanpur,

Dist:Alwar - 301706, Rajasthan, admeasuring approx..

81554.60 sq. mtr. It is stated that the Appellant had granted

Gran Electronics Limited (GREL), a subsidiary of VIL not covered

under the consolidation, a term loan of Rs. 200 crore. It is stated

that the term loan was granted on one of the secured of exclusive

mortgage of the Shahjahanour property owned by VIL, in favour

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 42 of 213 of the Appellant. The Appellant craves leave to produce the

Corporate Loan Agreement dated 10.09.2015 and the

Undertaking dated 10.09.2015 of constructive delivery of the

Shahjahanpur property to the Appellant, if required. However, it

is an admitted position that the Appellant enjoys exclusive

charge over the referred property at Shahjahanpur. Therefore,

the Appellant enjoys a pari passu charge with other lenders, over

all properties of the Videocon Group and also enjoys a separate

exclusive charge over the Shahjahanpur property, owned by VIL.

IV. The Videocon Companies are all undergoing CIRP pursuant to

different orders of the Adjudicating Authority. These proceedings

have however, been consolidated by an order dated 08.08.2019.

V. It is also stated by the Appellant that the Appellant is one of the

members of the CoC. It is stated that the Appellant was made

part of the CoCs pursuant to the Appellant filing its claim and

the same being admitted by the RP. It is stated that the RP has

admitted the Appellant's claim under the Rupee Terms Loan

agreement and also the Term Loan granted to GREL against the

security over the Shahjahanpur property owned by VIL. There

are 35 members being financial creditors in the CoCs. The

Appellant and IDBI Bank are the only two financial creditors

who have a separate and exclusive charge over certain

properties, over and above the parri passu charge under the

Rupee Term Loan Agreement, of the Videocon Companies as a

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 43 of 213 security towards their debts. It may be noted that the total debt

admitted towards the Appellant by the RP of the Videocon

Companies is Rs. 637.41 Crore. It may be noted that the

liquidation value of the Videocon Companies was recorded by

the CoC as in the 15th MoM held on 02.09.2020. It is stated that

the Liquidation Report summary was shared with the CoC at

the 15th Meeting is actually an incorrect value as per the

Appellant and such issues were raised by the Appellant. It is

stated that it is pertinent to note that the CoC has not given

explicit consent and approval to the liquidation value, however,

it is just that no member except the Appellant has raised an

objection to the same. The valuation reports themselves were

made available to the CoC member through the Virtual Data

Room. It is stated that as per the Appellant, the liquidation value

that has been used by the CoC in its subsequent calculations,

suffers from an arithmetic error in terms of (i) simplicitor

transcription error in terms of the liquidation value of the

Shahjahanpur property, (ii) double jeopardy to the liquidation

value due to again deducting the values for VTL Cash Balances,

after it has already been accounted for in the liquidation value

calculation, (VTL cash balances refer to certain amounts of VTL

which may be subject to the outcome of legal proceedings) and

(iii)error in transcription between the values for secured and

unsecured creditors' admitted claims, as given by the RP and as

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 44 of 213 used by the SBICaps for the calculation of the distribution

mechanism.

VI. It is also stated that pursuant to the notices inviting EOI, 11

proposals were received by the CoCs of the Videocon Companies,

out of these proposals, the legal advisors of the R-14 disqualified

9 proposals. Hence, the only proposals which were put before

the CoC were the proposals of R-15 and V-Shape Investment

Management Limited. The above referred two plans were

therefore, tabled before the CoC for further consideration by the

CoC members. It is stated that at the 19th meeting of the CoC, a

discussion on distribution of resolution amount for each

financial creditor was held. The RP had informed the CoC that

the two plans i.e. plans of R-15 and V-Shape Investment

Management Limited were in accordance with the Code and the

Regulations thereunder. It was informed to the CoC that

provisions had also been made to take care of dissenting

financial creditors including priority of payment and the

proposed plans and distribution mechanisms were in

compliance with the law. It is stated that thereafter, through e-

voting carried our between 14.11.2020 to 11.12.2020 in

furtherance of the 19th meeting of the CoC, the CoC voted on,

inter alia, the following:-

a. To approve the resolution plan submitted by TWIN Star,

found to be compliant with Section 30(2) of the Code under

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 45 of 213 Section 30(4) of the Code and to authorise the RP to issue a

letter to intent to Twin star and to file an application with the

Adjudicating Authority for approval of the Resolution plan

submitted by Twin star as per section 30(6) of the Code; and

b. To approve the Distribution Mechanism laid down in

Annexure II of the Minutes of the 19th Meetings of the CoC of

the Videocon Group companies.

VII. As per the Voting report, the R-15 was elected to be SRA having

received approval of 95.09% approval of the CoC. It is also stated

that the 20th Meeting of the CoC took place on 05.01.2021

wherein the Appellant raised its issue regarding the meaning of

'priority' of payment to dissenting FCs. However, it was

reiterated by the RP that the Resolution Plan is already

declared complaint under the relevant provisions of the

Code and therefore no further response was needed to be

provided on the particular query of 'priority'. It is stated

that the Appellant had again reiterated its query regarding

the error in valuation and treatment of valuation of VTL

cash balance on the distribution amounts. It has been

recorded in the said meeting that the RP asked his team to

discuss this issue with the present Applicant separately and

try and address them at an early stage, however, no proper

discussion or resolution was granted to the Applicant

whatsoever.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 46 of 213 VIII. It is stated that in the 21st Meeting of the CoC as well, the

concerns of the Appellant were similarly treated, in that it was

reiterated by the RP that the Resolution Plan was complaint with

the provisions of the Section 30(2) of the Code and Regulation

38(1)(b) of the Regulations. Reference may be had to the below

paragraphs reproduced from the minutes of the 21st Meeting of

the CoC.

"2.IFCI query: IFCI raised their pending queries to the Chair,

which was also e-mailed by IFCI to RP before the CoC meeting:

VTL Cash Balance :IFCI raised that VTL cash balance is part of

the liquidation value and accordingly should not be deducted for

computing share of dissenting FCs. On the contrary, SBI caps

has deducted INR 120.30 Crore towards VTL cash balance from

submitted average LV. The RP responded that firstly, the

distribution mechanism and the supporting calculations were

finalized by the lenders alongwith SBI caps and the same was

approved by the CoC members by majority. He further continued

that the mention VTL cash balance is subject to certain

litigations and currently there is a lien on the subject cash

balance of VTL. IFCI further added that in spite of the litigations

and lien, the CoC has accepted the valuation reports of 2

external valuation agencies who have given some liquidation

value to these cash balance/FDs. Accordingly, IFCI insisted that

the VTL cash liquidation value should be consistent with the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 47 of 213 valuation of these external agencies or the CoC/ RP needs to

record reasons for not accepting their valuation of the VTL cash

balance. The RP reiterated that he updated CoC about the

litigation of VTL cash balance only for the information of the CoC

and does not in any manner links the litigation to the treatment

of VTL cash balance at the time of arriving the liquidation value

(LV) in the distribution mechanism. He maintained that the

litigation matter is sub-judice and would not be in a position to

comment on the same.

(Revised lender-wise distribution: IFCI kept on insisting

that the distribution of amounts under the resolution plan

should be rectified by the RP and submitted to the entire

CoC by the RP. The RP clearly responded that the

distribution mechanism was tabled before CoC and approved

by the CoC in the CoC meeting held on 11.11.2020 and the

supporting distribution calculations arrived at by the

lenders alongwith SBicaps is already been submitted to the

Adjudicating Authority for the approval of the Resolution

Plan. Accordingly, the RP made it abundantly clear that he

or his team is not carrying out any revisions / rectifications

to the distribution mechanism/amount that was already

approved by the CoC and submitted to the Adjudicating

Authority for approval). The matter is sub-judice and no

further discussion/ amendments is warranted at this stage.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 48 of 213 IX. It is stated that from a perusal of the issue regarding VTL Cash

Balance, the RP has failed and unable to take it up with the

majority CoC. On one hand, the RP has allowed the double

deduction of the consideration of the VTL Cash balances from

the liquidation value calculation, however on the other hand he

stated that he updated the CoC about the litigation of VTL cash

balance only for the information of the CoC and does not in any

manner links the litigation to the treatment of VTL cash balance

at the time of arriving the liquidation value in the distribution

mechanism. He maintained that the litigation matter is sub-

judice and would not be in a position to comment on the same.

X. It is stated that the Appellant had filed the captioned IA No. 762

of 2021 before the Adjudicating Authority for essentially two

prayers, which are summarized as under:

a. Prayer for the payment of the liquidation value as per Section

30(2) of the Code payable to the Appellant as a dissenting

financial Creditor and quantified at Rs. 70.31 crore, be paid

in cash and upfront i.e. in priority to assenting financial

creditors.

b. Prayer to consider the correct value of the Videocon

Telecommunications limited cash balance for the purpose of

calculation of the liquidation value.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 49 of 213 XI. However, the Adjudicating Authority by its impugned order

dated 08.06.2021 was pleased to approve the plan submitted by

TSTL and was further pleased to dispose of the all the pending

IA's including that of the Appellant with certain directions.

XII. It is submitted that a bare perusal of the said Resolution Plan

would evince that the same is not in conformity with, inter alia,

the provisions of Section 30 of the Code to the extent of the

liquidation value and the priority of payment contemplated to

dissenting financial creditors. It is trite and evident on a bare

perusal of the Code and the Regulations framed thereunder,

including the CIRP Regulations that a Resolution Plan must

meet certain mandatory criteria and failure to meet such

mandatory requirements would result in the Resolution Plan

being illegal and bad in law and contrary to the settled provision

of the Code and the regulations framed thereunder. The

Resolution plan submitted by the R-15 TSTL has provided a

haircut of almost 90 to 95%. The plan provides meagre amount

of Rs. 2900 crore for an admitted liability of Rs. 65000 Crore.

The said waiver is almost of Rs. 62100/- Crore whereby public

money is lost. The main objective and the spirit of the Code is to

maximize the assets of the Corporate Debtor(CD), however the

Code has been used as a tool to do the exact contrary and

devaluate the CD assets. The Adjudicating Authority failed to

raise questions as to whether correct information has been

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 50 of 213 provided to the CoC for applying their commercial wisdom. The

Adjudicating Authority has in fact should have satisfied and

enquired the methodology for coming to a liquidation value and

whether the said value in itself portrays true and correct picture

of the CD.

XIII. It is also stated that the Adjudicating Authority has taken a

judicial note of the fact that secured financial creditor would get

less than 5% and other creditors will almost get nil amount. The

Adjudicating Authority ought to have consider that whether CoC

while applying its commercial wisdom has considered the

parameters u/s.30 of the Code R/w the provisions made

thereunder. The approval of the resolution plan is an order 'in

rem' and is binding on not only creditors, stake holders but is

ultimately binding on the public exchequer whose moneys has

been lend by the financial creditors. Therefore, the Adjudicating

Authority should have exercised its power U/s. 31 to record the

reasons for such a huge public loss and the impugned order

should reflect such application of mind by the Authority. The

impugned order is completely silent about the reason for such

vast difference in the amount so offered to the creditors and in

fact merely talks about the restricted role of the Adjudicating

Authority while exercising its jurisdiction under the Code. By

the way of the impugned order the Adjudicating Authority and

recorded its restrictions in exercising jurisdiction over the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 51 of 213 commercial wisdom, but the impugned order does not even

record the efforts on the part of the Adjudicating Authority to

verify as to whether true and correct information has been

provided to the CoC, whether the RP has completed his duty to

maximize the valuation of the CD in the letter and spirit of the

Code.

XIV. It is also submitted that Section 30(2) contemplates treating the

dissenting financial creditors as per the treatment they would

have received under a liquidation scenario, in the very least. It

is submitted that in the present resolution plan under

consideration, the plan will put the application, as a dissenting

financial creditor in a position even worse than in a

liquidation scenario. It is submitted that the payment

envisaged towards dissenting financial creditors is not less than

the amount to be paid in accordance with sub-section (1) of

Section 53 in the event of a liquidation of the CD. However, this

computation has to take into account not just the component of

the quantum of money but also when the Applicant receives the

money, as time value has a great impact on money.

XV. Further, in terms of the Resolution Plan, the financial creditors

who vote in favour of the resolution plan are to also be provided

a total of 8% equity shareholding in VIL on a post money fully

diluted basis and financial creditors such as the Appellant non-

convertible debentures to be issued which will remain

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 52 of 213 outstanding and shall carry a coupon of 6.65% p.a payable

annually. In this regard, it is submitted that the Code does not

provide for such methods as payment towards the debt of

financial creditor. In any case, even in case of liquidator of a CD

in case of liquidation is to entitled or empowered to issue non-

convertible debentures or such instruments, how could such

modalities be provided during CIRP as payout and discharge of

debts of the Appellant. It is pertinent that as per the provisions

of the Code, the dissenting Financial creditor are entitled to

payout of minimum amount of liquidation value that too in

priority manner as prescribed under Section 30 of the Code r/w

section 53 of the Code. However, if the Code does not provide

for modality for issuance of non-convertible debentures,

how could the same be treated as payouts/payment in

compliance with the provisions of the Code. In any case, it

is noteworthy that there is no upfront payment or cash

receipt by the Appellant and thus, the requirements of

Section 30(2) r/w Section 53 of the Code cannot be

construed to have been met by the present resolution plan

approved by the impugned order.

XVI. Further, issuance of NCDs cannot be considered valid

payment under the provisions of the Code inasmuch as the

same does not meet the essentials of the Code when the test

prescribed under Section 30 is for dissenting financial

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 53 of 213 creditor (DFC) to be paid in accordance with what is possible

and mandated in terms of Section 53 of the Code. Also, in

this regard, issuance of NCD cannot be correlated to payment

of DFC when issuance of same is not provided or permitted

under the Code. Pursuant to the approval of the resolution plan

by the Adjudicating Authority, the Appellant by email dated

21.06.2021 and 29.06.2021, requested for certain information,

however, till date there is no response from the RP, CoC's legal

counsel and SBICaps. Inspite of the said emails no response has

been received.

XVII. It is submitted that the said resolution plan does not seek to

take payment of the admitted amount due as on liquidation i.e.

Rs. 70,31,00,000/- to the appellant nor does it seek to do so in

priority as is mandated under the Code and the Regulations

framed thereunder. With regard to the issue of incorrect double

deduction of the VTL cash balance, reference may be had to the

Distribution Mechanism that is annexed to the minutes of the

19th meeting of the CoC. Part (ii) of the Component II talks about

the available cash balancing being subject to the vacation of lien

by the Hon'ble Delhi High Court. Thereafter, in the further

explanation, it is stated that the Contingent Cash balance and

Contingent Recoveries shall be distributed in the Distribution

Ratio of 95:5 amongst the financial creditors towards their

secured and unsecured admitted Financial debts. However,

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 54 of 213 such a scenario is assuming all members of the CoC have

assented to the Plan. In the case of any DFC, like the Appellant,

it is stated that the distribution mechanism provides that such

dissenting creditors would be paid in accordance with the

proposal under the resolution plan(s) for the DFC. It is trite to

note that the resolution plan under consideration does not

provide for the deduction of the VTL cash balance at all,

contrary to what is being considered by the CoC in its

calculation. Therefore, for this reason the errors as pointed out

by the Appellant regarding the calculation need to be properly

addressed by the RP and resolved. Also, Appellant separately

enjoys an exclusive charge over a property being the land and

buildings at the factory at SP-1 Vigyan Nagar Industrial Area,

Opp. RIICO Office, shahjahanpur, Dist, Alwar - 301706,

Rajasthan, admeasuring approx..81554.60 sq. mtr owned by

VIL to secure the debt of Rs.200 Crore advances to Gran

Electronics limited (GREL), (a subsidiary of VIL not covered

under the consolidation) by the appellant. Since the said debt of

GREL is not being resolved in the CIRP of VIL and other group

of companies, the said exclusive security in favour of the

appellant ought to be excluded from the purview of the

resolution approved by way of the impugned order dated

08.06.2021 and shall remain intact and unaffected until the

debt advanced to GREL is paid off or settled. Since by virtue of

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 55 of 213 being secured creditor to the extent the Shahjahanpur property

is concerned, there is exclusive rights/security of the Appellant

on such property, the debt advanced to GREL cannot be

considered or resolved as part of the resolution plan approved

by the impugned order, thus, the said property/security needs

to be excluded from the purview of the CIRP of the Respondents

and, in no manner, the financing documents/security

documents/contracts entered into in relation to the debt

advanced to GREL be affected / repudiated/ modified/

terminated. Further, without prejudice to the above or any other

ground/relief whatsoever claimed herein and as an alternative,

the appellant states that this Appellate Tribunal be pleased to

direct the RP to put on record the liquidation value which the

Appellant will receive under the Resolution Plan, upfront and in

cash. Also, by way of the impugned order, the Adjudicating

Authority has essentially modified the resolution plan in order

to approve the same. It is pertinent that the Adjudicating

Authority has approved the resolution plan of the SRA with

suggestion, request to both CoC and the SRA to increase the

pay-out amount to these operational creditors especially

MSMEs.

XVIII. It is also submitted that the Adjudicating Authority

exercises limited jurisdiction while approving the

Resolution plan and the limited jurisdiction exercised by

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 56 of 213 the Adjudicating Authority does not grant its right to

modify the resolution plan approved by the CoC. Once the

Adjudicating Authority determines that the resolution plan

is in contravention to provisions of the Code then such

Resolution Plan has to be sent back to CoC for

reconsideration in terms of the judgment passed by the

Hon'ble Supreme Court in Committee of Creditors of Essar

Steel India Limited (Supra), the relevant para is reproduced

herein below:

"If the Adjudicating Authority finds, on a given set of facts, that

the aforesaid parameters have not been kept in view, it may

send a resolution plan back to the Committee of Creditors to re-

submit such plan after satisfying the aforesaid parameters.

The reasons given by the Committee of Creditors while

approving a resolution plan may thus be looked at by the

Adjudicating Authority only from this point of view, and once it

is satisfied that the Committee of Creditors has paid attention

to these key features, it must then pass the resolution plan,

other things being equal."

XIX. Further, it is categorically clear that the Adjudicating

Authority is not empowered to modify the Resolution plan

while exercising the limited jurisdiction. It is submitted

that once the Adjudicating Authority made a determination

that the resolution plan is not in compliance to the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 57 of 213 provisions of the Code then the only recourse available with

the Adjudicating Authority was to either reject the

Resolution plan or sent it back to CoC for reconsideration.

Thus, the impugned order passed by the Adjudicating Authority

modifying the Resolution plan is in excess of jurisdiction vested

with the Adjudicating authority and ought to be set aside by this

Appellate Tribunal as it is settled principle of law that an order

passed without jurisdiction is nullity. Therefore, the impugned

order deserves to be quashed and set aside for failure of the

adjudicating Authority to effectively exercise its supervisory

power under the Code.

14. Submissions of the Respondent No.1 to 13 [(Resolution Professional(RP)]:

I. The Ld. Sr. Counsel on behalf of the RP of Respondent No.1 to 13

(Videocon Group Companies under CIRP) have stated the

following:

a. What Resolution Plan he has presented in compliance with the

Code and CIRP Regulations and were placed before the CoC

who has approved the same with 95.09% majority of the voting

share in accordance with the Section 30(4) of the Code. It is

the CoC, who has voted upon and approved the Resolution

Plan and distribution mechanism as per their wisdom. It was

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 58 of 213 his duty to place the same before the Adjudicating Authority

and the Adjudicating Authority has approved the same.

b. He has also stated that the Resolution Applicant vide email

dated 11.11.2020 addressed to the Respondent clarified that

payment to the DFC shall be limited to the Upfront Amount

and the NCDs issued pursuant to the Resolution Plan. It is

also pertinent to mention that under the Implementation

schedule of the Resolution Plan, the DFC are proposed to be

paid the upfront amount on the 44th day of implementation of

the resolution plan (T+44). In view of the foregoing clauses of

the Resolution plan, it is apparent that DFC are accorded

priority under the resolution plan on at least on the following

three accounts.

i.The DFC (including the Appellant herein) shall be paid at

least the amount payable to its under Section 53(1) in the

event of liquidation of the Corporate Debtors under the

Code, therefore, priority as regard the amount to be paid to

the DFC is respected and preserved under the Resolution

Plan.

ii.The upfront payment due to any DFC shall be made prior

to the upfront payment due to any Consenting/AFC.

iii.The NCDs issued to any DFC shall be redeemed prior to

the redemption of NCDs issued to the Consenting/AFC.

c. Clause 3.4.5(b) of the resolution plan is set out herein below:

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 59 of 213 "(b) In lieu of and as consideration of the said assignment,

transfer and conveyance of the part debt and the VTL debt, an

amount of INR 200 Crore ("Upfront Payment") shall be paid to

the Financial Creditors towards assignment of Part Debt. This

Upfront payment shall be deposited as per the timelines

specified in Clause 7.2 in such bank account as may be

specified by the Financial Creditors. The Upfront payment

shall be subject to adjustments on account of payments to

DFC."

d. In view of the aforesaid, it is submitted that the Appellant's

contention that, being a DFC, it is in a worse position than it

would be in the event the CDs were liquidated under Section

53 of the Code is misplaced and without any merit.

e. Without prejudice to the aforesaid, it is submitted that there

was no reason or occasion for the resolution plan to be sent

back to the CoC for reconsideration.

i.After filing of the said application and before its disposal by

the Adjudicating Authority, on or around 15.03.2021, the

Appellant filed its application before the Adjudicating

Authority inter alia challenging the resolution plan.

ii.On 24.03.2021, the Hon'ble Supreme Court in the matter of

Jaypee Kensington Boulevard Apartments Welfare Association

& Ors., Vs. NBCC (India) Ltd. & Ors. made some observations

in respect of payment to DFC under resolution plans.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 60 of 213 iii.The Application for approval of the resolution plan and the

Appellant's application were heard together by the

Adjudicating Authority and during the said hearing the

judgment of the Supreme court in Jaypee as stated supra was

duly brought to the attention of the Adjudicating Authority.

The Adjudicating Authority enquired its impact of the said

judgment on the present resolution plan, and particularly

whether "upfront" payment to the DFC shall be made under

the Resolution Plan.

iv. Attention of the Adjudicating Authority was invited to the

clauses of the resolution plan i.e. clause 3.4.5,3.5.1, 3.5.2 and

3.6.7 whereby priority status was ensured and the DFCs were

to be paid prior to the AFCs. Further, on behalf of the CoC, it

was submitted during the hearing of the application before the

Adjudicating Authority, that entire amount due to the

appellant as a DFC shall be paid upfront in the form of cash

and that no amounts due will be paid to the Appellant in the

form of NCDs, in line with the decision of Jaypee.

f. That by way of this Appeal, the appellant has sought to assail

the commercial wisdom of the CoC and the Appeal deserves to

be dismissed on this ground alone.

i.The CoC has voted upon a Distribution Mechanism

alongwith the Resolution Plan. As per the distribution

mechanism, wherein that the Appellant shall be paid

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 61 of 213 additional amounts, to the extent of difference between (i) the

amount allotted to the Appellant from the 'net cash

component' after applying the approved distribution formulate

and (iii) the amount payable to the Appellant in accordance

with Section 53(1) of the Code in the event of liquidation.

Therefore, as regards the amount payable to the Appellant, the

resolution plan is in compliance with the provisions of the

Code and CIRP regulations as at the relevant time of

submission of the Application before the Adjudicating

Authority. The Answering respondent craves leave to refer to

and rely upon the Distribution mechanism approve by the CoC

as and when produced. The decision on the distribution of

proceeds, so long as the same is complaint with the Code, is

within the domain of the CoC and ought not to be interfered

with by the Adjudicating Authority in view of Section 30(4) of

the Code.

ii.It is therefore, submitted that all contentions of the

Appellant on the basis that the Appellant or the other creditor

have received a purportedly small amount as an outcome of

the insolvency resolution process of the CDs are misconceived

and against the letter and spirit of the Code and the

Regulations framed thereunder. It is settled position of law

that the Adjudicating Authority as also this Tribunal do not

exercise jurisdiction over the commercial wisdom of the CoCs

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 62 of 213 who are obligated to take a decision after consideration inter

alia the viability and feasibility of the plan, the manner of

distribution and the order of priority of payments within their

commercial wisdom so long as their decisions are complaint

with the applicable provisions of law.

iii.It is also submitted that this Tribunal in the matter of India

Resurgence ARC Pvt. Ltd. Vs. M/s. Amit metaliks Limited

CA(AT) (Ins) no. 1601 of 2020 dated 02.03.2021 had observed

as under in the context of section 30(4) of the Code:

"6. ..... On a plain reading of this provision it is manifestly

clear that the considerations regarding feasibility and viability

of the Resolution Plan, distribution proposed with reference to

the order of priority amongst creditors as per statutory

distribution mechanism including priority and value of security

interest of Secured Creditor are matters which fall within the

exclusive domain of Committee of Creditors for consideration.

These considerations must be present to the mind of the

Committee of Creditors while taking a decision in regard to

approval of a Resolution Plan with vote share of requisite

majority.

...

7. It abundantly clear that the considerations including priority

in scheme of distribution and the value of security are matters

falling within the realm of Committee of Creditors. Such

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 63 of 213 considerations, being relevant only for purposes for arriving at

a business decision in exercise of commercial wisdom of the

Committee of Creditors, cannot be the subject of judicial review

in appeal within the parameters of Section 61(3) of I&B Code..."

It is clear from the aforesaid decision of this Tribunal that

matters which are sought to be assailed by the Appellant are

solely within the domain of the CoC.

g. The Appellant's contention that the property of R-1 exclusively

mortgaged to the appellant should remain unaffected or

"untouched" by the resolution plan is devoid of any merit or

logic.

i.The appellant contends that it has exclusive charge over a

property being held at Shahajanpur, Alwar, Rajasthan which

are given as security by R1, VIL, for the debt of Rs. 200 Crore,

advanced to one Gran Electronics Limited. The Appellant

contends that since the said loan is not being resolved as part

of the present CIRP, the said security ought to be excluded

from the purview of the resolution plan and ought to be

unaffected until the debt advanced to said Gran Electronics

Limited is resolved and that the documents entered into in

relation to the said debt should remain unaffected.

ii.It is also submitted that the contention of the Appellant is

fundamentally flawed for the following reasons. R-1 has

advanced a corporate guarantee to secure the debt advanced

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 64 of 213 to Gran Electronics Limited, and the Appellant heroin has filed

a claim for the amount owed to the Appellant in respect of the

said debts. Admittedly, the Appellant's claim to the extent of

Rs. 200 Crore pertaining to the Corporate guarantee provided

by R1 in favour of appellant to secure the aforesaid facility to

Gran Electronics Limited is also admitted by the RP. The

Appellant has filed a claim with the Respondent seeking to

recover its dues from the present CIRP, it cannot at the same

time contend that the mortgage given to secure the said debt

should remain unaffected by the present proceedings. It is also

stated that the said property belongs to the CD and ought to

be part of the CIRP proceedings in any event, and the limited

right that is available with the secured creditor is to vote

against the resolution plan if it so chooses. Under Section 18(f)

r/w Section 23(2) of the Code, the Answering Respondent is

duty bound to take custody and control of all assets over

which the CD has ownership rights. The said property at

Shahajanpur being a property of the CD i.e. R-1, could not be

left untouched or unaffected in the ongoing CIRP of R-1.

h. The Appellant's contention that the valuation of the CD is

incorrect is misconceived and deserves to be dismissed.

I.The Appellant has sought direction to the RP to place on

record the liquidation value which the appellant will receive

under the Resolution plans. It is submitted that there is no

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 65 of 213 obligation on the Respondent to place the valuation of each

stakeholder before them under the Code and/or in the

Resolution Plan. As regards valuation, the only obligation that

is cast upon the RP is the appointment of the valuers for

determination of the liquidation value of the CDs. Accordingly,

the liquidation value was determined and communicated to

the CoC (of which the Appellant is a part). Further, there is no

provision in the Code or the Regulations, for the CoC to

consent or approve upon the liquidation value. This is because

the Code contemplates independent and recognized bodies i.e.

registered valuers, to undertake this exercise and there is no

question of any approval on the same. Under Regulation 35 of

the CIRP regulations, the only option available with the RP is

to (i) appoint a third registered valuer if in the opinion of the

RP, there is significant difference in the two estimates of value

and (ii) consider the average of the closest estimates of value.

Beyond this, there is no scope for the RP to assess the

methodology of valuation, etc., as employed by the registered

valuers.

II.It is stated that the amounts provided to the DFC under the

resolution plan as stated under the form-H are categorically

stated to be "estimated amount basis the liquidation value

derived on the insolvency commencement date, and the

amount shall be determined at the time of payout in

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 66 of 213 accordance with the Section 30(2) and Section 30(4) of the

Code". Therefore, it is submitted that the appellant cannot

question the action undertaken by the Respondent in this

regard and cannot call upon the Respondent to disclose the

amount assigned to the Appellant at this stage since the same

is to be decided at the time of payout/distribution as per the

resolution plan. The Respondent has stated the estimated

amounts provided to the DFC basis the liquidation value to be

Rs. 105.23 crore. SBI Caps was advisor appointed by the CoC

for its own commercial reason and for purpose of compliance

with the Code and the CIRP Regulations, and the RP has no

role in such appointment. Accordingly, calculations and

values arrived by the SBIcaps and communicated to the CoC

for their commercial assessment cannot be made the basis of

a viable challenge to the Resolution plan before this Tribunal.

In any event, it is submitted that as stated above, the

Appellant shall be paid its dues amounts on the basis of the

liquidation value arrived by the valuation undertaken by the

registered valuers at the time of distribution. It is therefore,

submitted that the contentions of the appellant on valuation

are without any merit and deserve to be dismissed. In view of

the above there is no reason why the Appellant should not be

satisfied as regards the valuation exercise undertaken by the

Answering Respondent in respect of the CDs.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 67 of 213 i. It is also stated that there arises no question of sending the

Resolution plan back to the CoC for reconsideration as the

only aspect of the plan that was not allegedly not in line with

the Jaypee decision was also addressed by the direction of the

adjudicating Authority that upfront payment in cash shall be

made to the DFCs. Since the primary grievance of the DFCs

was that they should be paid in cash up front and in priority,

and it has been addressed as per the existing position of law,

the present appeal deserves to be dismissed. In any event, the

Resolution plan is already approved by over 95% of the CoC,

approval from the CoC in respect of the resolution plan is

already in place and there is no reason for sending the

resolution plan for reconsideration before the CoC.

15. Company Appeal (AT) (Ins) No. 529 of 2021:

A.Submissions of the Appellant- Small Industries Development

Bank of India.

I. The Ld. Counsel Appellant has submitted that the list of dates

and events as stated in the Memo as enumerated below:

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 68 of 213 Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 69 of 213 Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 70 of 213 II. The Plan provides amounts to the Appellant bank less than the

liquidation value which the bank will receive otherwise and therefore

contrary to section 30 of Code.

1. In 19th COC meeting, it was recorded that SBI Caps 'process

advisors' shall send detail workings on the distribution amount

receivable to each financial creditor including 'dissenting creditors'. On

13 November 2020, the process advisor SBI CAPS sent an email stating

'distribution mechanism presentation and the excel calculation

(including the liquidation value calculation)' for perusal of all the

members. As per the same the total liquidation value amount payable

to the Appellant bank is 2.06 crore. The said excel sheet categorically

provided that in the event the Appellant financial creditor dissents,

there is a difference of 0.42 crore which the financial creditor will have

to bear. The RP in 21st COC, to query categorically raised by one of the

financial creditors Bank of Maharashtra, confirmed that there is no

change in the Distribution Calculation as calculated and shared by SBI

Caps.

2. However there is a discrepancy in the FORM H and the total amount

payable to the Dissenting creditor which shows that the same is 105.23

crore. However, as per the Distribution calculation shared by SBI CAP's,

the total amount payable to the Appellant Bank is 2.06 crore and

amount payable to Bank of Maharashtra is 41.85 crore and amount

payable to IFCI (another dissenting creditor) is around 70 crore thus far

exceeding the amount of 105 crore mentioned in Form H.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 71 of 213 B. The entire contention that the amounts will be determined "at the

time of payout" in itself is misconceived:-

1. Section 30(2)(b) mandates the Resolution Professional to examine

each plan and confirm that the same provides for payment of debt to

the financial creditor who do not vote in favour of the Resolution Plan

in such manner as may be specified by the Board, which shall not be

less than the amount to be paid to such creditors in accordance with

Sub Section 1 of Section 53 in the event of Liquidation.

2. The statutory duty cast upon the RP is to ensure that the amounts

payable to the dissenting creditor shall be not less than the liquidation

value. Thus, the said Section presupposes that the RP and the Creditors

are aware about the liquidation value payable to the Financial Creditors

in the event they dissent. The contention the said amounts will be

calculated 'at the time of pay out' shows that there is a complete non-

compliance of Section 30(2)(b) that is to say that if the amounts were

never calculated.

3. Section 30(4) provides that the COC may approve after considering

its feasibility and viability including 'the manner 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 Security Interest of a secured Creditor', and such

other requirements as may be specified by the Board.

4. Thus, even the said section pre-supposes 3 aspects (i) manner of

distribution is already determined, (ii) liquidation value is calculated as

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 72 of 213 per Section 53, (iii) and the COC is aware of the values of security

interest of secured creditors.

5. Infact, the very decision making of COC is vitiated for not determining

the said liquidation value payable to the financial creditors.

C. The direction by the Adjudicating Authority to the SRA to pay

the dissenting financial creditors by cash instead of NCD's (without

sending the plan back to the COC for reconsideration) amounts to

modification of plan which is impermissible.

1. While considering the feasibility of the Plan, the aspect of 'legality' of

the plan was also considered by the Appellant Bank and the same

contributed to the decision of the bank of dissenting the plan. Similarly,

other creditors, must have also considered the said aspect and voted on

the plan.

2. However, replacing of the method of payment from debentures to

Cash, amounts to modification. The entire tenor of the plan and

financial model of plan is based on the payment by way of NCD's. This

changes the nature of the plan and must be considered by the COC

independently.

3. The Jaypee Kensington matter, identical facts were dealt by the

Hon'ble Supreme Court, whereby the dissenting financial creditor (ICICI

bank) was offered security and alternate lands instead of payments.

This Appellate Tribunal while holding that the payment other than cash

is not permissible to dissenting creditors, also went on to modify the

plan to negate the said illegality and directed payments to DFC in cash.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 73 of 213 The Hon'ble Supreme Court specifically held that the same is not

permissible as the modification in payment is a commercial aspect and

in exclusive domain and Commercial Wisdom of the COC and cannot

be interfered. The Hon'ble Supreme court held that such modification

is not permissible. (Paragraphs 126- 130).

4. The adjudicating authority has committed the same error which was

committed in the case of Jaypee Kensington.

5. The reliance on clause 3.5.7 of the plan is also misplaced. The same

is a generic statement and cannot be read in isolation from the entire

tenor and the financial model of the plan.

6. Reading the clause 3.5.7 in isolation will amount to reading the

distribution mechanism/amounts in isolation to the plan which should

be infact an integral part of the plan.

7. Clause 3.5 entirely deals with payments to be made to the DFCs and

states that the same would be paid by way of NCDs. There is no whisper

of "cash".

8. Even otherwise by way of an affidavit the Respondents cannot justify

the Impugned Order and supplement reasons. The impugned Order

doesn't state that in view of clause 3.5.7, the said plan is not required

to be sent back to the COC.

D. Plan does not provide for 'upfront' payment in 'priority' to the

Dissenting Financial creditor as provided in Section 30 of IBC code

2016 r/w IBBI regulation 38

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 74 of 213

1. It is submitted that to show compliance of 'priority' payment to

dissenting creditors, the plan is engineered in such a fashion so as to

show that the NCDs available with the dissenting financial creditors

would be redeemable one day prior to the assenting financial creditors.

This is no priority at all and merely an eye wash. The same violates the

scheme and the spirit of the code.

2. A priority is a situation where the money is being paid over and above

other creditors. Akin to CIRP cost. Regulation 38 provides that

operational creditors will have priority over financial creditors and

thereafter dissenting financial creditors will have priority over assenting

financial creditors. Thus, conjoint reading of Section 30 with Regulation

38, reflect the distribution pattern of priority in the event if the

resolution plan is approved.

In the above circumstances, the Appellant humbly prays that the

appeal should be allowed.

B. Submissions of the Respondent No.1 to 13 [Resolution Professional (RP)]:

I. The Ld. Sr. Counsel on behalf of the RP of Respondent No.1

to 13 have stated the followings:

a. The Resolution Professional has examined the Resolution Plan

in the context of treatment being accorded to the Dissenting

Financial Creditors and has found the same to be in

compliance with the law.

i.It is submitted that under Clause 3.4.5, 3.5.1, 3.5.2 and

3.5.7 of the Resolution Plan, as reproduced in the Affidavit in Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 75 of 213 Reply dated 29th August, 2021, filed by the Resolution

Professional ("RP's Reply"), the Resolution Plan preserves and

protects the priority status to the Dissenting Financial

Creditors (DFC).

ii. The aforesaid clauses in the Resolution Plan ensure priority

to the Dissenting Financial Creditors at least on three

accounts, which are as under:

 The Dissenting Financial Creditors are to be paid at

least the amount payable to them in the event of

liquidation under Section 53(1) of the Insolvency and

Bankruptcy Code, 2016 ("Code");

 Upfront payment to Dissenting Financial Creditors shall

be made before upfront payment to Assenting Financial

Creditors is made;

 Non-convertible debentures ("NCDs") issued to

Dissenting Financial Creditors shall be redeemed before

NCDs issued to Assenting Financial Creditors are

redeemed. [Ref para 4 III e), pg. 11-12 and i), pg. 13 of

RP Reply]

iii.Basis the aforesaid Clauses in the Resolution Plan relating to

treatment of Dissenting Financial Creditors interests, it is clear

that the Resolution Plan was compliant as per Section 30(2)(b) of

the Code read with Regulation 38(1)(b) of IBBI (Corporate

Insolvency Resolution Process) Regulations, 2016 ("CIRP

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 76 of 213 Regulations"). [Ref para 4 III c), pg. 10-11, f), pg. 12 and g), pg.

12-13 of RP Reply]

iv.The Resolution Plan read with email dated 11th November,

2020 received from the Resolution Applicant provides that for the

purpose of computation of the liquidation value, only the Upfront

Amount and the NCDs proposed to be issued will be taken into

consideration as equity shares are not being issued to the

Dissenting Financial Creditors. At the relevant time, NCDs were

proposed to be issued to the Dissenting Financial Creditors and

the same was found to be in compliance with the Code and the

CIRP Regulations as per the law as applicable at that time. [Ref

para 4 III d) at pg. 11 of RP Reply]

v.The decision of the Hon'ble Supreme Court in the matter of

Jaypee Kensington Boulevard Apartments Welfare Association v.

NBCC (India) Ltd ("Jaypee") was passed only on 24th March,

2021, which was after the filing of the Application for approval of

the Resolution Plan ("Plan Approval Application") before the

National Company Law Tribunal, Mumbai ("Adjudicating

Authority") on 15th December, 2020, for approval of the

Resolution Plan. Therefore, the RP could not have checked the

Resolution Plan for compliance in accordance with Jaypee. In any

event, as submitted hereinabove, the Resolution Plan by way of

the aforesaid clauses, in particular Clause 3.5.7, clearly provides

that in all circumstances and in any event, the payment proposed

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 77 of 213 to be made and the manner of making the said payment to the

Dissenting Financial Creditors shall be strictly as per Section

30(2)(b) of the Code read with Regulation 38(1)(b) of the CIRP

Regulations. Further, pursuant to the position in Jaypee and the

Impugned Order dated 8th June, 2021, the grievance of the

Appellant that they should be paid in cash and in priority has

also been addressed. Therefore, the present Appeal deserves to

be dismissed for being devoid of merit. [Ref para 4 II e), pg. 9,

para 4 IV e) and f), pg. 15 of RP Reply].

b. Commercial wisdom of the Committee of Creditors ("CoC") is

paramount and cannot be assailed.

i. It is submitted that the commercial wisdom of the CoC is

paramount. Eleven resolution plans were received for the

Corporate Debtors, of which two were found to be compliant

with the applicable provisions of the Code and the CIRP

Regulations. The two compliant plans were placed before the

CoC for voting. The CoC approved Respondent No. 15's

Resolution Plan with over 95% majority. [Ref para V, pg. 16-

18 of RP Reply].

ii.It is a settled position of law that commercial wisdom of CoC

in accepting or rejecting the Resolution Plan is paramount and

that there should be no interference to an approved resolution

plan, unless the same contravenes Section 30(2) of the Code.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 78 of 213 [K. Sashidhar v. Indian Overseas Bank ; Committee of

Creditors of Essar Steel India Limited v. Satish Kumar Gupta

; Jaypee Kensington Boulevard Apartments Welfare

Association v. NBCC (India) Ltd4 and Kalpraj Dharamshi v.

Kotak Investment Advisors 5 ].

iii.The Adjudicating Authority has found the Resolution Plan

compliant with the said provisions, therefore the present

Appeal which seeks to assail the commercial wisdom of the

CoC deserves to be dismissed.

c. The Appellant's contention that the determination of the

liquidation value and distribution of monies under the

Resolution Plan is not compliant with the Code and the CIRP

Regulations, is without any merit.

i. The Appellant has placed sole reliance on an email dated

13th November, 2020 received by it from SBI Caps to allege

that the distribution of monies under the Resolution Plan is

not in accordance with the Code and the CIRP Regulations.

SBI Caps is the process advisor appointed by the CoC, and the

RP is not responsible as to the correctness or otherwise of any

distribution working arrived at by the CoC process advisor.

[Ref para VI c), pg. 21-22 of RP Reply] The RP has not received

the said email from SBI Caps.

ii.For valuation, the RP appointed two reputed valuers that are

registered with IBBI namely RBSA Advisors and Rakesh

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 79 of 213 Narula. Valuation reports were obtained from them on a

confidential basis over email on 2nd September, 2020. [Ref

para VI b), pg. 20-21 of RP Reply].

iii.The liquidation value and fair value in accordance with the

valuation reports prepared by the registered valuers have been

stated in Form H submitted along with the Plan Approval

Application filed before the Adjudicating Authority for

approval of the Resolution Plan. [Ref para VI b) iii), pg. 21 of

RP Reply].

iv.Along with the Resolution Plans, the "distribution

mechanism" was put to the vote and was placed before the

Adjudicating Authority; the "distribution mechanism" stated

that the Dissenting Financial Creditors will be paid the

amount payable to them as per law. The "distribution working"

as mentioned by the Appellant, which was arrived at by SBI

Caps, was not put to vote before the CoC and neither did the

RP confirm that the "distribution working" is final nor was the

same placed before the Adjudicating Authority. [Ref para VI c),

pg. 21-22 of RP Reply].

v.The "distribution mechanism" is said to have been prepared

assuming that all financial creditors will vote in favour of the

Resolution Plan and was prepared prior to voting. After

completion of the voting, the RP has arrived at the amounts

owed to the Dissenting Financial Creditors, the security

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 80 of 213 interest mapped to them, the value of asset over which such

security is created, he cash / NCDs being brought in by

Respondent No. 15 and the distribution ratio approved by the

CoC. Such amount is an estimated amount and can only be

decided at the time of distribution as stated in Form H.

vi. The calculations by SBI Caps, which is process advisor

appointed by the COC for its own commercial reasons, cannot

be the sole basis of challenge to the Resolution Plan. The RP

has not commented on the individual figures but has only

arrived at the estimated amount to be paid to the Dissenting

Financial Creditors as per the Code and the CIRP Regulations.

[Ref para VI c), pg. 21-22 of RP Reply]. In any event, as stated

above, under the Resolution Plan, the Dissenting Financial

Creditors shall be paid at least the amount payable to them in

the event of liquidation under Section 53(1) of the Code.

vii.In the Minutes of the 21st Meeting of the CoC, the RP only

clarified that there was no change in the distribution

mechanism/ list as approved in 19th Meeting of the CoC. The

RP never stated that individual lender wise distribution

calculation arrived at by SBI Caps was submitted to the

Adjudicating Authority for approval. Only the distribution

mechanism was placed before the Adjudicating Authority after

it was also voted upon and approved by the CoC along with

the Resolution Plan.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 81 of 213 viii.In compliance with the Code and the CIRP Regulations, the

RP has stated the estimated amount payable to the Dissenting

Financial Creditors in Form H submitted along with the Plan

Approval Application and that the actual amount shall be

determined at the time of pay-out. [Para 5 g), pg. 24-25 of RP

Reply].

ix.It is categorically stated in the Resolution Plan that the

exact amount payable to the Dissenting Financial Creditors

shall be arrived at, at the time of payment, which is on T+44

day, T being date of approval of the Resolution Plan. Before

such day has even arrived, the Appellant filed its application

before the Adjudicating Authority and also the present Appeal,

prematurely assuming that it shall not receive the amount due

and payable to it as per law. [Ref para 4 III d) at pg. 11 of RP

Reply]

x.The RP is not in a position to determine the exact amount

payable to the Appellant prior to the date of actual payment in

view of the eventualities that could arise. Therefore, the RP

has provided an estimated number in Form H. The RP has not

contravened the requirements of the Code and the CIRP

Regulations.

d. The Resolution Plan does not need to be sent back to the CoC

for reconsideration

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 82 of 213 i. The only aspect of the Resolution Plan that was allegedly not

compliant with the Jaypee decision was also addressed by the

direction of the Adjudicating Authority that upfront payment

in cash shall be made to the Dissenting Financial Creditors.

The primary grievance of the Dissenting Financial Creditors

that were before the Adjudicating Authority has been

addressed by the Impugned Order.

ii.This Appellant never approached the Adjudicating Authority

challenging the Resolution Plan, therefore, it cannot be

permitted to raise these concerns at such a belated stage for

the first time. [Ref para IV, pg. 14-16 of RP Reply].

16. Submissions of the Respondent No.15/Successful Resolution

Applicant (SRA):

I. The Resolution Plan does not provide DFC with Liquidation Value.

a. Clause 3.4.5 and Clause 3.5.1 clearly provide that the DFC shall

not be paid less than at least the amount payable to them in

accordance with sub-section (1) of section 53 of the IBC in the

event of a liquidation of the Corporate Debtors.

b. Further, Clause 3.5.1 of the Resolution Plan categorically states

that the DFC shall be paid their portion of Upfront Payment

before the consenting financial creditors and Clause 3.5.5 of the

Resolution Plan provides that all cash disbursements to the DFC

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 83 of 213 will be made one day prior to cash disbursements to the

consenting financial creditors

c. Hence, the requirement to pay the liquidation value and the

aspect of priority which are mentioned at Section 30(2)(b) of the

Code and Regulation 38(1)(b) of CIRP Regulations is complied

with by the Resolution Plan.

d. However, the Appellant in the present Appeal relied on the email

dated 13.11.2020 of SBI Caps to allege that the Resolution Plan

does not provided it with the liquidation value. The basis for such

allegation as stated by the Appellant is as follows:

(i). That as per email dated 13.11.2020 the liquidation

value share of Appellant will be INR 70.31 crore and

that of Bank of Maharashtra and SIDBI (other DFCs)

is INR 41.85 crore and INR 2.06 crore respectively

(which in turn total to around INR 114.21 crore)

(ii) The Appellant compares the above figure of INR

114.21 crore with the figure of INR 105.23 crore which

is disclosed in the Form H to be the amount payable

under the Resolution Plan to DFC. On this basis, the

Appellant alleges that it is receiving amounts less than

the liquidation value.

e. In response to above, it is submitted that the above figures

pertain to the distribution mechanism only and not to the

entitlement of liquidation value to the DFCs under the Resolution

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 84 of 213 Plan. In any event, the grievance of the Appellant is premature

and misconceived since Form H categorically mentions against

the sum of INR 105.23 crore that "These are the estimated

amounts basis the liquidation value derived as on the insolvency

commencement date, and the amounts shall be determined at the

time of payout in accordance with Section 30(2) and Section 30(4)

of the Code."

f. In view of the above declaration in Form H, the Respondent No.

15 submits as follows:

(i) The liquidation value mentioned as payable to DFC in

Form H is an estimated amount only.

(ii) The final figures payable to DFC are yet to be

determined by the CoC.

(iii) The stage for determination of final figures shall arises

only at "the time of payout".

(iv) As per Clause 7.2 of the Resolution Plan, the time of payout

to the DFC is on the T+44th day, with T being the date of

approval of the Resolution Plan by the Hon'ble Adjudicating

Authority.

(v) Even before such a stage could have been reached, the

Appellant has filed the present Appeal.

(vi) Hence, the present Appeal is premature.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 85 of 213 g. In addition to above and in any event it has been clarified by the

Resolution Plan and the Form H that the amount payable to the

DFC shall not be less than the liquidation value. Therefore, it is

submitted that the present Appeal, apart from being premature,

is misleading and without any basis.

II. The Approval Order modifies the Resolution Plan

a. It is submitted that the decision of the Hon'ble Supreme Court in

the case of Jaypee (supra) (passed on 24.03.2021) directing that

DFCs should be paid in cash was not in existence on the date

when the Resolution Plan was submitted i.e., 07.11.2020 or the

date when the Resolution Plan was approved by the CoC i.e.,

11.12.2020.

b. Nevertheless, Clause 3.5.7 of the Resolution Plan clarifies that in

all circumstances and in any event, the payment proposed to be

made and the manner of making the said payment to the DFC

shall be made strictly as per Section 30(2)(b) of the Code read

with Regulation 38(1)(b) of the CIRP Regulations. Further, Clause

3.4.5 of the Resolution Plan states that all Admitted Financial

Debt of the Financial Creditors of the Corporate Debtors will be

settled after taking into account order of priority amongst

creditors as laid down under Section 53(1) read with Section

30(2)(b)(ii) and 30(4) of the IBC.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 86 of 213 c. A conjoint reading of the above provisions of the Resolution Plan

clearly shows that the Resolution Plan had already clarified that

the payment to the DFC shall be made in accordance with Section

30(2) of the Code. Pursuant to the decision of the Hon'ble

Supreme Court in Jaypee (supra) such payment under Section

30(2) can be made only in cash. As such, the Respondent No. 15

would make payment to the DFC in cash as provided for in the

Resolution Plan.

d. In view of the above, it is submitted that the Resolution Plan is in

compliance with Section 30(2) of the Code and the settled

parameters laid down by the Hon'ble Supreme Court. It is for this

reason, that the Hon'ble Adjudicating Authority approved the

Resolution Plan by observing at paragraph 24 of the Approval

Order that the payments to DFC shall be made in cash.

e. It is submitted that the observation made by the Hon'ble

Adjudicating Authority at paragraph 24 of the Approval Order

does not amount to modification of the Resolution Plan since the

Resolution Plan has already clarified at Clause 3.5.7 that the

manner of making payment to DFC shall strictly be in accordance

with Section 30(2) of the Code and Regulation 38(1)(b) of the CIRP

Regulations.

f. Hence, it is submitted that the observation in the Approval Order

is a mere reiteration of what is contained at Clause 3.5.7 of the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 87 of 213 Resolution Plan. No part of the Resolution Plan, let alone its basic

structure, has been modified by the Approval Order.

III. The Appellant's challenge to the Resolution Plan on equitable

considerations is irrelevant and baseless

a. The Appellant has also alleged in its Appeal that the haircut

provided in the Resolution Plan are vast and this fact has not

been looked into by the Hon'ble Adjudicating Authority.

b. In this regard, it is submitted that the commercial wisdom of CoC

in approving the Resolution Plan is paramount and there can be

no interference in the same unless the Resolution Plan

contravenes a mandatory provision of the Code. In this regard,

the Respondent No. 15 relies on the following decisions of the

Hon'ble Supreme Court:

 K. Sashidhar v. Indian Overseas Bank (2019) 12 SCC 150;

 Committee of Creditors of Essar Steel India Limited v.

Satish Kumar Gupta (2020) 8 SCC 531;

 Jaypee Kensington Boulevard Apartments Welfare

Association v. NBCC (India) Ltd 2021 SCC Online SC 253,

and;

 Kalpraj Dharamshi v. Kotak Investment Advisors Civil

Appeal Nos. 2943-2944 of 2020].

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 88 of 213

17. Company Appeal (AT) (Ins) No. 545 of 2021:

A. Submissions of the Appellant- Electrolux Home Products INC.

I. The Ld. Sr. Counsel for the Appellant has submitted that it is a market

leader in the business of manufacturing and distributing electrical

appliances including refrigerators, dishwashers, washing machines,

vacuum cleaner, cookers, which, through its globally established brands,

sells over 60 million household and professional products in more than

150 markets every year.

II. The Appellant is the Registered Proprietor in India of, inter alia, the

following trademarks:

SL No. Class Number Mark 1. 7. 456948 KELVINATOR 2. 7. 2750132 KELVINATOR THE COLLEST ONE 3. 9 529690 KELVINATOR 4. 9 1906547 KELVINATOR 5. 9 2434796 KELVINATOR 6. 9 2503025 KELVINATOR 7. 9 2540643 KELVINATOR 8. 11 113327 KELVINATOR 9. 11 502337 KELVINATOR 10. 11 2268975 KELVINATOR 11. 11 2434796 KELVINATOR 12. 11 2750132 KELVINATOR THE COLLEST ONE

III. Originally, the Appellant's parent company, AB Electrolux

("ABE"), controlled and held 91.85% of the equity share capital in

one Electrolux Kelvinator Limited ("EKL"). EKL therefore belonged to

and/or formed part of the Electrolux Group. Under a Share

Purchase Agreement ("SPA") dated July 7, 2005, ABE transferred all

of its equity shares and a portion of its preferential shares in EKL to

Mr. Venugopal Dhoot. By this SPA, Mr. Dhoot became the primary

shareholder in EKL. Upon and by reason of the transfer EKL ceased

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 89 of 213 to be a part of the Electro lux Group. Simultaneously with the SPA,

a Trademark License Agreement ("TLA") dated July 7, 2005 was

executed between the Appellant and EKL inter alia for licensing the

aforesaid Trademark to EKL. EKL then merged into the Corporate

Debtor under a scheme of merger and amalgamation. This scheme

was sanctioned by the Bombay High Court by its order dated June

30, 2006. As a result, thereof, all the assets and liabilities of EKL,

including the TLA, stood transferred to the CD. The CD, therefore,

became the licensee of the said Trademark.

IV. The TLA dealt with the manner in which and also set out in extenso

the terms and conditions on which the Licensee would be entitled to

use the said Trademark. By the TLA, the Appellant granted the

licensee an exclusive right and license to use the Trademark on or

in connection with the manufacture, packaging, sale, marketing,

distribution and services of the Trademark Products (as described

below) in India, Bangladesh, Bhutan, Nepal, Pakistan and Sri Lanka

("Sales Area"). Trademark Products were defined to mean products

of different models and sizes in the categories of refrigerators,

freezers, washing machines, microwaves, dishwashers, dish

sterilizers, dish dryers, microwave ovens, air conditioners, cooker

hoods and hobs (all for consumer use) whose specifications, quality,

packaging, advertising and promotional literature conformed to the

standards imposed by the TLA in respect of which the licensee was

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 90 of 213 entitled to use the Trademark. Some of the key terms of the TLA are

set out below, for ease of reference:

Clause 3.1- " "Licensee shall not voluntarily or by operation of law

assign or transfer this Agreement or any of Licensee's rights or duties

hereunder or any interest of Licensee herein ... Any assignment,

transfer or sub-license without Licensor's written consent shall be

null and void ... "

Clause 6.9: "Licensee shall warrant Trademark Products as the

applicable laws in the Sales Area may require, furnish a locally

competitive warranty to the user of every Trademarked Products, and

arrange to provide, at no cost to Licensor prompt and adequate

warranty service for all Trademarked Products sold by Licensee

throughout the Sales Area for the duration of the warranty period,

even after the termination of this Agreement ... "

Clause 16.2: "Notwithstanding anything to the contrary in this

Agreement, Licensor may terminate this Agreement with immediate

effect, by written notice to Licensee, if any of the following events

occur:

a. Licensee files for bankruptcy, goes into liquidation other than a

voluntary liquidation for the purpose of a bona fide reorganisation or

any winding up, restructuring or any other proceedings to a similar

effect have been filed and admitted against the Licensee (except for

an ex-parte admission) and has not been withdrawn, dismissed or

disposed of within 90 days from the date of such admission

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 91 of 213

(d) Licensee ... takes any action or undergoes any event, any or all of

which results in the Dhoot family no longer being in control of the

Licensee ...

Clause 17.1: "In the event this Agreement is terminated in accordance

with its terms, Licensee shall assign, transfer and transmit to Licensor

any and all rights of Licensee in the Trademark (if any) including

associated goodwill, and shall not thereafter manufacture or sell any

Trademark Product or use the Trademark in any manner; provided

that, Licensee may however, dispose of its stock of Trademarked

Product on hand within two hundred seventy (270) days after expiry

of this Agreement; provided, however, any sums due to Licensor have

first been paid; and further provided, that Licensee shall, prior to the

effective date of said expiry or termination, deliver to Licensor a

detailed schedule of all inventory of Trademarked Product in

Licensee's possession..."

Clause 17.4: "Except for the right to use the Trademark as specifically

provided for in this Agreement, (i) Licensee shall have no right, title, or

interest in or to the Trademark, and (ii) upon and after the termination

of this Agreement, all rights granted to Licensee hereunder, together

with any interest in and to the Trademark that Licensee may acquire,

shall forthwith and without further act or instrument be assigned to

and automatically revert to the Licensor ... "

Termination of the TLA:

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 92 of 213 V. The subject petition seeking to admit the Corporate Debtor into

CIRP was filed on January 1, 2018. On June 5, 2018, the

Appellant addressed a letter ("June Letter") to the Corporate

Debtor, recording that upon the Petition being admitted, the

powers of the Corporate Debtor's Board of Directors would vest

in the interim resolution professional. This would mean that the

Dhoot family would no longer be in control of the Corporate Debtor.

The TLA specified that the Appellant was entitled to terminate the

TLA if the Corporate Debtor underwent any event that resulted in

the Dhoot family no longer being in control. Accordingly, in terms of

its rights under Clause 16.2( d)( iii) of the TLA, the Appellant stated

that the TLA would stand terminated from the date on which the

Petition would be admitted. The relevant portions of the June Letter

are extracted below:

"Clause 16.2(d)(iii) of the TLA provides that Licensor is entitled to

terminate the agreement with immediate effect in the case the

Licensee undertakes any action or undergoes any event, which

results in the Dhoot family no longer being in control of the Licensee.

In the present case, admission of the CIRP application by the NCLT

will have (inter alia) the following consequences by necessary

operation of law: (i) under Section 17(l)(a) of the IBC, management of

the affairs of the Licensee will vest with the interim resolution

professional; and (ii) under Section 17(l)(b) of the IBC, the powers of

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 93 of 213 the board of directors of the Licensee shall stand suspended and be

exercised by the interim resolution professional.

Therefore on admission of the CIRP by the NCLT, the Dhoot family will

no longer be in control of the Licensee. Accordingly, the Licensor

hereby terminates the TLA pursuant to Clause 16.2(d)(iii} of the TLA.

Such termination shall become effective on the date on which the

application for CIRP is admitted by the NCLT ("Effective Date'') without

the requirement for any further notice, communication, application or

any other action on part of the Licensor. In accordance with Clause

17.1 .... of the TLA, on Effective Date... the Licensee shall not

thereafter manufacture or sell any Trademarked Product ... the

Licensor directs that the Licensee forthwith ... deliver to the Licensor

a detailed schedule of all inventory of Trademarked Product in

Licensee's possession ... "

VI. On June 8, 2018, the Adjudicating Authority passed an order

admitting the Petition and appointing Mr. Anuj Jain as the Interim

Resolution Professional ("IRP"). As a consequence of this order, the

powers of the Board of Directors of the Corporate Debtor, together

with those members of the Dhoot family who were on the Board,

stood suspended and such powers became exercisable by the IRP.

The Dhoot family therefore ceased to be in control of the Corporate

Debtor. Thereafter, in terms of the TLA and June Letter, the

termination became effective and inter alia all rights in the

Trademark reverted back to the Appellant. Respondent No. 1, as the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 94 of 213 RP, therefore became obligated to comply with its post termination

contractual obligations, as specified in the TLA. Immediately after

the appointment of Mr. Jain as the IRP, the Appellant addressed an

email dated June 8, 2018 to the IRP, requiring the IRP to confirm

receipt of the June Letter. The IRP replied by way of an email dated

June 9, 2018, confirmed receipt of the June Letter. Again, on

September, 21, 2018, the Appellant addressed a letter to R-1

(September Letter), calling the Trademark products, and to provide

an exhaustive schedule of all inventory of trademark products

currently in the Corporate Debtor's possession. On October, 18,

2018, the Appellant received a letter dated October 15, 2018 (RP I

Letter) and a letter dated October 18, 2018 ("RP II Letter"), addressed

on behalf of the RP. The aforesaid letters belatedly questioned/

challenged the termination of the TLA. By the RP I Letter:

a.The Appellant's termination of the TLA was invalid;

b. The termination of contracts pursuant to initiation of insolvency

proceedings would frustrate the objectives of the Code; and

c. The Corporate Debtor was entitled to continue to operate as per

the TLA.

VII. It is also stated that On October 19, 2018, the Appellant replied to

the RP I Letter and RP II Letter ("October Letter"). In this October

Letter, the Appellant:

a. Reiterated that the termination of the TLA was valid and lawful;

b. noted that the RP's challenge of the termination was belated;

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 95 of 213 c. pointed out that the RP's conduct in not denying the termination in

earlier correspondence estopped the RP from challenging the

termination at this stage;

d. without prejudice to the valid termination of the TLA by the June

Letter, it also invoked its rights under Clause 16.2 (a) of the TLA.

Clause 16.2(a) entitled the Appellant to terminate the TLA in case

Videocon "files for bankruptcy, goes into liquidation other than a

voluntary liquidation for the purpose of a bonafide reorganization or

any winding up, restructuring or any other proceedings to a similar

effect have been filed and admitted against [Videocon] and has not

been withdrawn, dismissed or disposed of within 90 days from the

date of such admission";

e. Stated that the RP had, in effect, admitted to being in breach of its

post termination obligations under the TLA by continuing to use the

Trademark even after termination of the TLA; and

f. repeated its request that the RP cease unauthorisedly

manufacturing and selling the Trademark Products and deliver up an

inventory of all Trademark Products in his possession.

VIII. Again, in correspondence on November 23, 2018 (Exhibit K to MA

527/2019), the Appellant reiterated its requests that the RP intimate

all prospective bidders that the TLA was terminated and that the

Corporate Debtor was no longer entitled to use the Trademark. The

Appellant also called upon the RP to ensure that obligations under

the TLA with respect to providing warranty services are fulfilled.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 96 of 213 IX. On December, 24, 2018 the Appellant received a letter addressed on

behalf of the RP ("RP III Letter"). Through this letter, the RP came up

with an altogether new ground to challenge the termination of the

TLA. The RP inter alia challenged the termination of the TLA as being

invalid on account of the moratorium imposed by Section 14 of the

Code; and the RP requested that the Appellant therefore should

withdraw the June Letter. The Appellant replied to the RP III Letter

by its letter of December 24, 2018 ("December Letter"), pointing out

that the termination of the TLA was valid and lawful, and inter alia

reiterating its requests that the Respondent abide by its obligations

in law and contract. Given the RP's wanton disregard of contractual

obligations, the Appellant was constrained to file MA 527/2019

before the Adjudicating Authority on February 5, 2019, seeking inter

alia a declaration that the termination of the TLA was valid and

directions that the RP be prohibited from using the Trademark in

any manner.

X. It is also stated that the judgment of the Hon'ble Supreme Court in

Gujarat Urja (supra), the Adjudicating Authority had jurisdiction to

and was required to adjudicate questions in MA 527/2019 as they

related directly to the CIRP of the Corporate Debtor, since the

termination of the TLA was inter alia on grounds of commencement

of CIRP proceedings against the Corporate Debtor. The TLA entitled

the Appellant to terminate the TLA in case Videocon "files for

bankruptcy, goes into liquidation other than a voluntary liquidation for

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 97 of 213 the purpose of a bonafide reorganisation or any winding up,

restructuring or any other proceedings to a similar effect have been

filed and admitted against [Videocon] and has not been withdrawn,

dismissed or disposed of within 90 days from the date of such

admission".

XI. It is also stated that Respondent No. 1 had placed no material on

record as to why or how the TLA is essential to the CIRP of thirteen

group companies, twelve of whom never manufactured the

Trademark Product. Further, Respondent No. l admitted at the

hearing before the NCL T that the Corporate Debtor has stopped

manufacturing products under the Trademark since sometime in

2018 - which further bears out the fact that the TLA is not relevant

to the going concern status of the Corporate Debtor, let alone

something that goes to the root of the same. The Code did not entitle

the RP to take possession of assets belonging to a third party. The

license under the TLA was a mere right (that too determinable in the

circumstances set out in the TLA) to use the Trademark, which, at

all times, remained the asset of the Appellant. The termination of the

TLA was not in violation of the moratorium imposed by Section 14

of the Code and the RP had grossly erred in failing to respect and

recognize the termination of the TLA.

XII. On June 8, 2021, the NCL T pronounced the Impugned Order merely

stating that MA 527/2019 was disposed of, and that Respondent No.

2 would be entitled to use the Trademark for a period of one year

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 98 of 213 from the date of the order. Thereafter, the Impugned Order was made

available on the website of the Adjudicating Authority on June 14,

2021 and a certified copy of the Impugned Order was issued on June

16, 2021. In this regard, it may be noted that the sum total of the

discussion in the Impugned Order with respect to MA 527/2019 is

as follows:

"As far IA 527 of 2019, praying for use of Brand name "Kelvinator" is

concerned, we are of the considered view that the Agreement should

continue for at least a year from the date of approval of the Plan as

per the existing Terms and Conditions as a transitional arrangement

and subsequently it is upto both the parties to decide on the same as

per their mutual understanding".

XIII. It is stated that, as far as MA 527/2019 is concerned, in the

Impugned Order the Adjudicating Authority has totally failed to even

record the contentions of the respective parties, let alone deal with

the said contentions. In this context, it is pertinent to note that both

sides made oral submissions at the hearing on May 7, 2021 and

thereafter, filed written submissions of their respective contentions.

Despite this, there is not even a whisper in the Impugned Order of

the contentions raised by the respective parties. Instead, in

paragraph 11, the Adjudicating Authority proceeds to dispose of MA

527/2019 in a totally unreasoned, arbitrary and non-speaking

manner which fails to even give a glimpse of what weighed with the

Adjudicating Authority or what formed the basis of its decision. It is

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 99 of 213 respectfully submitted that the Impugned Order is ex facie

unsustainable, perverse and deserves to be set aside on this ground

alone. That the Impugned Order dealing with precious civil rights of

parties is required to be a speaking and reasoned order. If parties'

rights are being affected, the Adjudicating Authority reasons for the

same are required to be recorded. Despite the Appellant canvassing

extensive submissions and arguments on why the termination of the

TLA was valid, and why the Corporate Debtor and/or entities

claiming under it could not utilize the Trademark, the Adjudicating

Authority passed the Impugned Order granting Respondent No. 2

the right to use the Trademark for one year. It recorded no reasons

for its arbitrary order on this front. On this ground alone, the

Impugned Order requires to be set aside.

XIV. That the Impugned Order is arbitrary and has been passed without

application of mind, insofar as it concerns MA 527/2019. The

question before the Adjudicating Authority was whether the

termination of the TLA was valid. If the termination was valid, there

is no question of any right to use the same continuing to vest in

Respondent No. 2. If the termination was found to be invalid, there

is no requirement for the right to be limited to one year. In recording

an extra-legal 'transitional arrangement', with respect, the

Adjudicating Authority has overstepped its role as Adjudicating

Authority and attempted to step into the shoes of contracting

parties, forcing parties to extend bargains/ vary the terms of the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 100 of 213 same, and that too without any reasons whatsoever being recorded

for the same. That the Impugned Order has been passed without

considering any of the detailed arguments canvassed by the parties.

Despite MA 527/2019 having been filed in February 2019, despite

the same being heard by the adjudicating Authority and written

submissions filed not once but twice, the questions of law and fact

have been disposed of without recording, let alone dealing with, any

of the arguments raised by the Appellant. The Impugned Order

deserves to be set aside on this ground alone. That the Impugned

Order has been passed in complete disregard of the Hon'ble Supreme

Court's decision in Gujarat Urja (supra) that termination of

contracts on grounds of insolvency are liable to be interfered with by

the Adjudicating Authority only in cases where such termination

would result in the legs of the CIRP being cut off. This is clearly not

so in the present case. In the present case, the Appellant pointed out

that there were no facts on record to support the case that

continuation of the TLA was essential to the Corporate Debtor,

especially in light of Respondent No. 1's admission before the

Adjudicating Authority that the Trademark had not been used since

2018. The Adjudicating Authority, in passing the Impugned Order,

ignored the following findings that are dispositive of the issues raised

in the subject proceedings:-

"J Validity of ipso facto clause

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 101 of 213

88. Before we proceed to analyse the validity of the

termination of the PPA by the appellant under Articles

9.2.J(e) and 9.3.1 in the present case, it is important to

contextualize it within the larger debate on this issue.

Globally, ipso facto clauses arise in a variety of

contracts. Ipso facto clauses are contractual provisions

which allow a party ("terminating party") to terminate

the contract with its counterparty ("debtor") due to the

occurrence of an 'event of default'. In the context of

insolvency law, in some of these ipso facto clauses, the

'event of default' include applying for insolvency,

commencement of insolvency proceedings,

appointment of insolvency representative, et al. The

United Nations Commission on International Trade

Law released its Legislative Guide on Insolvency Law

in 2004. This guide defines ipso facto clauses in the

following terms:

"114. Many contracts include a clause that

defines events of default giving the counterparty

an unconditional right, for example, of termination

or acceleration of the contract (sometimes referred

to as "ipso facto" clauses). These events of default

commonly include the making of an application for

commencement, or commencement, of insolvency

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 102 of 213 proceedings; the appointment of an insolvency

representative; the fact that the debtor satisfies

the criteria for commencement of insolvency

proceedings; and even indications that the debtor

is in a weakened financial position ... "

The validity of such ipso facto clauses has been considered

in a global perspective by international organizations and

in the domestic jurisdictions of nation-states in their

national insolvency laws. In order for us to assess their

validity in India, we must first understand the global

trends in contemporary jurisprudence. We can attempt to

extrapolate our experiential learning from comparative

law. As India develops into a responsive member of the

international community, our laws cannot afford to be

inward looking.

...

J.3 Position in India

129 Before we consider the extent to which the lessons

of other jurisdictions should be applied to India, it is

important to advert to the discussion on the invalidation of

ipso facto clauses in India.

130 In 2005, the Report of the Expert Committee on

Company Law headed by J.J. Irani 120 noted the

requirement of reforms in the Indian insolvency regime,

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 103 of 213 specifically citing the lessons from the recently published

UNCITRAL Guide. In relation to the moratorium period, it

made the following observations:

"Moratorium and suspension of proceedings 13.1 A limited

standstill period is essential to provide an opportunity to

genuine business to explore re-structuring.

13.4 The law should provide for treatment of

unperformed contracts. Where the contracts provide

for automatic termination on filing of insolvency, its

enforcement should be stayed on commencement of

insolvency.

13.5 There should be enabling provisions to interfere with

the contractual obligations which are not fulfilled

completely. Such interference or overriding powers would

assist in achieving the objectives of the insolvency process.

The power is necessary to facilitate taking appropriate

business and other decisions including those directed at

containing rise in liabilities and enhancing value of assets.

13.6 Exceptions of such powers are also essential to be

insured in the law where there is a compelling, commercial,

public or social interest in upholding the contractual rights

of the counter party to the contract. "

131 The Committee noted the need to invalidate ipso

facto clauses so as to prevent the value of a Corporate

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 104 of 213 Debtor's assets from becoming diluted during the

insolvency process. However, this invalidation was to be

subject to exceptions, keeping in mind the "compelling,

commercial, public or social interest in upholding the

contractual rights of the counter party to the contract".

132 However, as is evident, this recommendation was

never directly embodied legislatively since the current

Code contains no clear-cut provision which invalidates

ipso facto clauses. In fact, the issue of the invalidation of

ipso facto clauses was noted in a December 2018 report

titled 'Insolvency and Bankruptcy Code: The journey so far

and the road ahead' issued by Vidhi Centre for Legal

Policy. The report notes that the Code "does not per se

prohibited the operation of ipso facto clauses during

insolvency proceedings. However, Section 14

provides for a limited exception prohibiting the

termination, suspension or interruption of specified

"essential goods or services" (i.e. water, electricity,

telecommunication services and information

technology services to the extent they are not direct

inputs to the output produced or supplied by the

corporate debtor), and also provides relief to the

corporate debtor from the recovery of any property

by an owner or lessor during the moratorium". As a

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 105 of 213 solution, the report recommends a conditional stay on the

operation of ipso facto clauses, beginning from the

insolvency commencement date, since "a complete stay on

the operation of ipso facto clauses would constitute a

serious restraint on the freedom of contract and would

effectively compel suppliers to perform contracts even

when such an action is against their commercial interests".

In relation to the implementation of this solution, the report

suggests the insertion of a new provision to the Code.

133 More recently, however, the IBC was amended

by the Insolvency and Bankruptcy Code (Amendment) Act,

2020 which, inter alia, introduced an Explanation to

Section 14(1). The Explanation to Section 14(1) reads thus:

"14. Moratorium.-

Explanation.-For the purposes of this subsection, it is

hereby clarified that notwithstanding anything contained

in any other law (or the time being in force, a license,

permit, registration, quota, concession, clearances or a

similar grant or right given by the Central Government,

State Government, local authority, sectoral regulator or

any other authority constituted under any other law for the

time being in force, shall not be suspended or terminated

on the grounds o(insolvency, subject to the condition that

there is no default in payment of current dues arising (or

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 106 of 213 the use or continuation of the license, permit, registration,

quota, concession, clearances or a similar grant or right

during the moratorium period".

134 The legislative intent behind this amendment was

discussed in the Report of the Insolvency Law Committee

dated 20 February 2020. The Report noted the importance

of keeping the Corporate Debtor as a 'going concern' during

the moratorium period imposed under Section I4, and how

it was being affected by the termination of certain

Government licenses, permits, et al, based on ipso facto

clauses which allowed termination upon commencement of

insolvency. Noting that the legislative intent underlying

Section I4 would be to invalidate such terminations, the

Report recommended the addition of the Explanation to

Section 14(1) of the IBC. The relevant portion, in relation to

the Explanation to Section 14(1), reads thus:

Prohibition on Termination on Grounds of Insolvency

8.3. It was brought to the Committee that in some cases

government authorities that have granted licenses, permits

and quotas, concessions, registrations, or other rights

(collectively referred to as "grants") to the corporate debtor

attempt to terminate or suspend them even during the CIRP

period. This could be attempted in two ways: one, by

relying on ipso facto clauses, by virtue of which these

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 107 of 213 grants may be terminated on the advent of insolvency

proceedings themselves, and second, by initiating

termination on account of non-payment of dues.

8.4. The Committee discussed that by and large, the

grants that the corporate debtor enjoys from the

substratum of its business. Without these, the business of

the corporate debtor would lose its value and it would not

be possible to keep the corporate debtor running as a going

concern during the CIRP period, or to resolve the corporate

debtor as a going concern. Consequently, their termination

during the CIRP by relying on ipso facto clauses or on non-

payment of dues would be contrary to the purpose of

introducing the provision for moratorium itself. Thus, the

Committee concluded that the legislative intent behind

introducing the provision for moratorium was to bar such

termination.

8.5. In this regard, the Committee noted that depending on

the nature of rights conferred by them, these grants may

constitute the "property" of the corporate debtor. Section

3(27) of the Code provides an inclusive definition of

property which includes "money, goods, actionable claims,

land and every description of property situated in India or

outside India and every description of interest including

present or future or vested or contingent interest arising

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 108 of 213 out to: or incidental to, property." This definition is

substantially the same as the definition of "property" under

Section 436 of the Insolvency Act, 1986 (UK), which has

been considered the widest possible definition of property.

In India too, it is accepted that certain licenses and

concessions can convey permission to use property, or may

embody a lease, permit, etc. granting rights in the property.

Thus, their termination in certain circumstances, could

have been considered contrary to an order of moratorium

barring actions under Section 14(1)(d) or preventing

alienation of property by any person.

8.6. Similarly, in many circumstances, termination or

suspension of grants, particularly registrations, would be

through proceedings that follow due process of law. Such

proceedings may be a form of enforcement that would

deprive the corporate debtor of its assets. In this regard,

The Committee noted that the Section 14(1)(a) prevents "the

institution of suits or continuation of pending suits or

proceedings against the corporate debtor including

execution of any judgement, decree or order in any court of

law, tribunal, arbitration panel or other authority"

(Emphasis supplied). This provision has been given an

expansive reading by the Appellate Authority and the

Adjudicating Authority, that had passed orders preventing

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 109 of 213 recovery by stock exchanges and regulators, as well as the

de-registration of aircrafts.

8. 7. Relying on this, the Committee was of the view that

termination or suspension of such grants during the

moratorium period would be prevented by Section 14.

However, to avoid any scope for ambiguity and in exercise

of abundant caution, the Committee recommended that the

legislative intent may be made explicit by introducing an

Explanation by way of an amendment to Section 14(1)".

...

152 As the above excerpts indicate, but (or the subsistence

of the PPA. the Corporate Debtor would no longer remain

as a 'going concern'. Differently stated. by virtue of the PPA

with the appellant being the sheet-anchor of the Corporate

Debtor's business and consequently of the CIRP, its

continuation assumes enormous significance (or the

successful completion of the CIRP. The termination of the

PPA will have the consequence of cutting the legs out from

under the CIRP.

K.2 Validity of the termination of PPA

153 As discussed in Section "J.3 " of this judgement, the

broader question of the validity of ipso facto clauses has

been the subject matter of sustained legislative

intervention in many jurisdictions. This is an intricate

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 110 of 213 policy determination, for it raises a series of questions

about striking the appropriate balance between

contractual freedom on the one hand and corporate rescue

on the other. We are cognizant that any rule that we might

craft, howsoever narrow, could have a series of

unintended second order effects, in terms of opening the

floodgates for intervention from the NCLT that might

impinge upon contractual freedom of the terminating party.

Further, the comparative experience also teaches us that,

given that the invalidation of ipso facto clauses can

unsettle the interests that contractual relationships are

founded upon, some jurisdictions that have invalidated

such clauses have done so in a cautious, prospective

fashion. This ensures that while the policy of the

insolvency law is brought into tandem with the global

regimes, it does not affect the contractual rights of those

parties who could not have reasonably accounted for this

change in position while negotiating their contractual

terms. Such an approach is an evidence and recognition of

the harmful effects on commercial stability that such

encroachment into contractual freedom can generate, even

when done legislatively after careful deliberation.

154 The question of the validity/invalidity of ipso facto

clauses has been discussed in a variety of documents over

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 111 of 213 the years, such as: (a) UNCITRAL Guide of 2004; (b) J.J.

Irani Committee Report of 2005: (c) Vidhi 's Report of 2018

critiquing the IBC; and (d) IBBI's Report of 2020, which

acknowledges the issue of ipso facto clauses in relation to

government grants. All these materials were available to

the members of the various committees which discussed

the IBC. Further, suspension of contracts during

insolvency was specifically allowed under Section 22(3) of

SICA, which was the erstwhile statutory regime. Section

22 of the SICA provided for the suspension of legal

proceedings and contracts, of which sub-Section (3) was in

the

"(3) Where an inquiry under section 16 is pending or any

scheme referred to in section 17 is under preparation

or during the period] of consideration of any scheme under

section 18 or where any such scheme is sanctioned

thereunder, for due implementation of the scheme, the

Board may by order declare with respect to the sick

industrial company concerned that the operation of all or

any of the contracts, assurances of property, agreements,

settlements, awards, standing orders or other instruments

in force, to which such sick industrial company is a party

or which may be applicable to such sick industrial

company immediately before the date of such order, shall

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 112 of 213 remain suspended or that all or any of the rights,

privileges, obligations and liabilities accruing or arising

thereunder before the said date, shall remain suspended

or shall be enforceable with such adaptations and in such

manner as may be specified by the Board: Provided that

such declaration shall not be made for a period exceeding

two years which may be extended by one year at a time

so, however, that the total period shall not exceed seven

years in the aggregate. "

Parliament would have been conscious of the provision

which was adopted in the SICA. Yet, no concrete position

has been adopted in relation to the termination of ipso

facto clauses by the legislature under the IBC. In the

absence of an express prohibition by the legislature, it can

be argued that there is no general embargo on the

operation of such clauses if they are part of a valid contract

under the Contract Act.

155 At the same time, we cannot lose sight of the fact

that this Court is apprised with a novel situation where the

'going concern' status of a corporate debtor will be negated

by a termination of its sole contract, on the basis of an ipso

facto clause. It is pertinent to note that the IBC has been in

effect from 5 August 2016, and has also been amended

multiple times. Hence, if the 'going concern' status of

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 113 of 213 corporate debtors was being affected on a regular basis

due to ipso facto clauses (which are in vogue even in the

present contracts similar to the current PPA), then the

legislature may, if it considered necessary, have

proceeded to legislate on an explicit position with regard to

the operation of ipso facto clauses. However, this Court in

the present case is not required to resolve the broad

question of whether the invalidation/stay of ipso facto

clauses in India, generally, is legally permissible. This is a

matter which raises complex issues of legal policy and a

balancing between distinct and conflicting values. Reform

will have to take place through the legislative process. The

stages through which legislative reform must take place -

absolute or incremental - is a matter for legislative change.

Our task is limited to the issue of deciding whether the

Adjudicating Authority correctly exercised the jurisdiction

vested in it, in the facts of this case, to stay the termination

of the PPA. In the absence of an explicit stand taken by the

legislature, this Court's intervention in this matter would

be guided by ascertaining the legislative intention from the

provisions of the IBC. 163 Although various provisions of

the IBC indicate that the objective of the statute is to

ensure that the corporate debtor remains a 'going concern',

there must be a specific textual hook for the Adjudicating

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 114 of 213 Authority to exercise its jurisdiction. The Adjudicating

Authority cannot derive its powers from the 'spirit' or

'object' of the IBC. Section 60(5)(c) of the IBC vests the

Adjudicating Authority with wide powers since it can

entertain and dispose of any question of tact or law arising

out or in relation to the insolvency resolution process. We

hasten to add, however, that the Adjudicating Authority's

residuary jurisdiction, though wide, is nonetheless defined

by the text of the Code. Specifically, the Adjudicating

Authority cannot do what the IBC consciously did not

provide it the power to do.

164 In this case, the PPA has been terminated solely on

the ground of insolvency, which gives the Adjudicating

Authority jurisdiction under Section 60(5)(c) to adjudicate

this matter and invalidate the termination of the PPA as it

is the forum vested with the responsibility of ensuring the

continuation of the insolvency resolution process, which

requires preservation of the Corporate Debtor as a going

concern. In view of the centrality of the PPA to the CIRP in

the unique factual matrix of this case, this Court must

adopt an interpretation of the Adjudicating Authority

residuary jurisdiction which comports with the broader

goals of the IBC. Sir P.B. Maxwell in his commentary, On

Interpretation of Statutes 129, has emphasized that a

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 115 of 213 provision should be given a harmonious interpretation

which comports with the intention of the Legislature. The

commentary provides:

"The rule of strict construction, however, whenever

invoked, comes attended with qualifications and other

rules no less important, and it is by the light which each

contributes that the meaning must be determined. Among

them is the rule that that sense of the words is to be

adopted which best harmonises with the context and

promotes in the fullest manner the policy and object of the

legislature. The paramount object, in construing penal as

well as other statutes, is to ascertain the legislative intent

and the rule of strict construction is not violated by

permitting the words to have their full meaning, or the more

extensive of two meanings, when best effectuating the

intention. They are indeed frequently taken in the widest

sense, sometimes even in a sense more wide than

etymologically belongs or is popularly attached to them, in

order to carry out effectually the legislative intent, or, to

use Sir Edward Cole's words, to suppress the mischief and

advance the remedy."

165 Given that the terms used in Section 60(5)(c) are of

wide import, as recognized in a consistent line of authority,

we hold that the NCLT was empowered to restrain the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 116 of 213 appellant from terminating the PPA. However, our decision

is premised upon a recognition of the centrality of the PPA

in the present case to the success of the CIRP, in the factual

matrix o(this case, since it is the sole contract for the sale

of electricity which was entered into by the Corporate

Debtor. In doing so, we reiterate that the NCLT would have

been empowered to set aside the termination of the PPA in

this case because the termination took place solely on the

ground of insolvency. The jurisdiction of (the Adjudicating

Authority under Section 60(5)(c) of (the IBC cannot be

invoked in matters where a termination may take place on

grounds unrelated to the insolvency of the corporate

debtor. Even more crucially, it cannot even be invoked in

the event of a legitimate termination of a contract based on

an ipso facto clause like Article 9.2.l(e) herein, if such

termination will not have the effect of making certain the

death of the corporate debtor. As such, in all future cases,

NCLT would have to be wary of setting aside valid

contractual terminations which would merely dilute the

value of(the corporate debtor, and not push it to its

corporate death by virtue of it being the corporate debtor's

sole contract (as was the case in this matter's unique.

166 The terms of our intervention in the present case

are limited. Judicial intervention should not create a fertile

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 117 of 213 ground for the revival of the regime under section 22 of

SICA which provided for suspension of wide-ranging

contracts. Section 22 of the SICA cannot be brought in

through the back door. The basis of our intervention in this

case arises from the fact that if we allow the termination

of the PPA which is the sole contract of the Corporate

Debtor, governing the supply of electricity which it

generates, it will pull the rug out from under the CIRP,

making the corporate death of the Corporate Debtor a

foregone conclusion.

173 In conclusion, we hold that:

(i) The NCLT/NCLAT could have exercised jurisdiction

under section 60(5)(c) of the IBC to stay the

termination of the PPA by the appellant, since the

appellant sought to terminate the PPA under Article

9.2.1 (e) only on account of the CIRP being initiated

against the Corporate Debtor;

(ii) The NCLT/NCLAT correctly stayed the

termination of the PPA by the appellant, since

allowing it to terminate the PPA would certainly

result in the corporate death of the Corporate Debtor

due to the PPA being its sole contract: and

(iii) We leave open the broader question of the

validity/invalidity of ipso facto clauses in contracts

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 118 of 213 for legislative intervention. Consequently, for the

above reasons we find no merit in this appeal and it

is accordingly dismissed . ... "

XV. Analysed in the above framework, it becomes clear that Impugned

Order, so far as it relates to MA 527/2019, requires to be set aside.

There was no pleading let alone material placed on record by

Respondent No. l, nor does the Impugned Order note, that the

Trademark which was licensed to Corporate Debtor is the sheet

anchor of the Corporate Debtor or that termination of the license

would cut the legs out from under the CIRP of the Corporate Debtor

- which are crucial tests framed by the Hon'ble Supreme Court in

Gujarat Urja (supra). In fact it is clear from the Respondent No.1's

admission that the Trademark has not been used since 2018. That

the Respondents clearly failed to make out any case to satisfy the

test laid down by the Hon'ble Supreme Court in Gujarat Urja (supra)

and was therefore, precluded from questioning the termination of

the TLA on the ground that it was precluded or not permitted under

the Code. That the Impugned Order fails to consider that the

Trademark is not an asset of the Corporate Debtor. The NCL T failed

to consider in this regard that under the TLA:

a. The Trademark IS the exclusive property of the Appellant.

b. The Corporate Debtor was simply granted a license to

use the Trademark in a defined manner.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 119 of 213 c. The TLA specifically provides that "Except for the right

to use the Trademark as specifically provided for in this

Agreement, (i) Licensee shall have no right, title or

interest in or to the Trademark, and (ii) upon and

after the termination of this Agreement, all rights granted

to Licensee hereunder, together with any interest in and

to the Trademark that Licensee may acquire, shall

forthwith and without further act or instrument be

assigned to and automatically revert to the Licensor ... ".

d. The TLA provided the Respondent/ Corporate Debtor a

determinable license to use the Trademark in accordance

with certain defined terms, for the term of the agreement.

e. Clause 3.1 of the TLA states that the TLA and the

Licensee (Corporate Debtor's) rights under the TLA cannot

be assigned! transferred either voluntarily or by

operation of law to any third party without the

Appellant's written consent.

That the Impugned Order failed to consider that:

a. Since the Trademark does not belong to the Corporate

Debtor, and/or is not its asset, it cannot be handed over

to a third party as a part of the "Corporate Debtor's

basket of assets".

b. The TLA is not an "asset" or "property" of the Corporate

Debtor that can be monetised during the insolvency

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 120 of 213 resolution process. The RP cannot attempt to stake claim

over assets belonging to a third party merely because it

would add value to the Corporate Debtor's estate.

XVI. The TLA does not fall within the scope of essential goods and services

set out under Section 14 of the Code. By way of an amendment

brought in with effect from December 28, 2019, the IBC clearly

specifies that:

"" ... a license, permit, registration, quota,

concession, clearances or a similar grant or

right given by the Central Government, State

Government, local authority, sectoral

regulator or any other authority constituted

under any other law for the time being in

force, shall not be suspended or terminated on

the grounds of insolvency, subject to the

condition that there is no default in payment

of current dues arising for the use or

continuation of the license, permit,

registration, quota, concession, clearances or

a similar grant or right during the moratorium

period".

The TLA does not fall within the categories of licenses

that may not be terminated as set out in the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 121 of 213 explanation extracted above. There is therefore no

basis in the law to suggest that the termination of the

TLA by the Appellant is impermissible in law.

Notwithstanding the aforesaid, assuming (without

admitting) that the TLA is considered to fall in the

category of 'essential good or services' and could not

have been terminated during the moratorium, then

under the provisions of Section 14 of the IBC read

with Regulation 13 of the IBBI (Insolvency Regulation

Process for Corporate Persons) Regulation, 2016, any

losses owed to the Appellant during the continued

refusal to recognize the termination of the TLA would

be payable as Insolvency Resolution Process Costs,

which the resolution plan admittedly fails to do.

Further any such moratorium on terminating

essential services also ceases to operate on

completion of the CIRP period. Accordingly, in any

event, there is no circumstance under which the TLA

can be said to transfer to the successful resolution

applicant.

XVII. That the Impugned Order has been passed in violation

of settled principles of law, natural justice, without

noting or dealing with the Appellant's submissions, and

without providing any reasons.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 122 of 213 XVIII. What the ld. Sr. Counsel for the Appellant has tried to conveyed

by the elaborate submissions is the followings:

I. The Appellant relationship with Corporate Debtor arises from a trade

mark license agreement from July, 07, 2005. The Appellant is

entitled to terminate the Trademark License Agreement (TLA), if the

there is a bankruptcy or the Corporate Debtor under goes any event

that leads to the Dhoot family no longer in control. Once the

insolvency petition was filed on 05.06.2018 terminated the

agreements accordance with, they have TLA dated 07.07.2005, the

termination is valid in the eye of law and Resolution Professional has

no authority to use the trade mark and show the Adjudicating

Authority cannot direct the Appellant for even allowing TLA valid for

next one year. While as per the own submissions of the RP the Trade

mark was not even being used since 2018.

II. As far as legal submissions were concerned, the order of the

Adjudicating Authority dated 08.06.2021 is totally unreasoned and

non- speaking order by citing multiple judgments as enunciated

below:

 Raj Kishore Jha v. State of Bihar ((2003) 11 SCC 519; paras.

7,8,15,19);

 Rangi International Ltd. v. Nova Scotia Bank ((2013) 7 SCC 160,

para. 3);

 Siemens Engineering and Manufacturing Co. of India Ltd. v.

Union of India and Anr (AIR 1976 SC 1785, para. 6);

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 123 of 213  State of Orissa v. Dhaniram Luhar ((2004) 5 SCC 568, paras. 6

to 8);

 Victoria Memorial Hall v. Howrah Ganatantrik Nagrik Samity

((2010) 3 SCC 732 9, paras. 40, 41)]

III. Termination of the TLA was valid in the eye of law and in accordance

with Hon'ble Supreme Court Judgment in Gujarat Urja Vikas Nigam

Limited Vs. Amit Gupta & Ors. (Civil Appeal No. 9241 of 2019,

decided on march 8, 2021

IV. It was also stated by ld. Sr. Counsel for the Appellant that the

transitional arrangement has no basis in law. If termination of the

TLA was lawful and the underlying application allowed, there would

be no question of continuing for one year. However, if termination

was unlawful- there no requirement to restrict it to one year. The

transitional arrangement has no basis in law or contract.

V. It was also stated that the Resolution Plan could only provide for

subsisting contracts for the purpose of carrying on the business of

the Corporate Debtor and which were subsisting or having effect

immediately before the Impugned Order, be deemed to continue and

to be valid and subsisting. The Resolution Plan is binding on all

stakeholders including the Appellant and the TLA is deemed to be

valid and subsisting. The Appellant is not aware about the contents

of the Resolution Plan. Notwithstanding the same, the aforesaid

argument is misconceived primarily for the reason that the TLA was

already terminated by the Appellant on June 5, 2018, and therefore

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 124 of 213 the Resolution Plan could not have provided for validity and

subsistence of a contract which was already terminated. (Appellant's

Affidavit in Rejoinder to the Affidavit in Reply of Respondent No. 2,

paras 7-8). Additionally, it is settled law that a resolution plan

cannot operate to unilaterally modify contractual rights of an entity

that is a third party and entirely unrelated to the Corporate Debtor. (Jaypee Kensington Boulevard Apartments Welfare Association &

Ors. v. NBCC (India) Limited & Ors., 2021 SCC OnLine SC 253, para. 265; MCGM v. Abhilash Lal & Ors., (2020) 13 SCC 234; para. 47)

VI. It has also been emphatically conveyed the validity of ipso facto

clauses and alleged that clause 16.2 of the TLA is in contravention

of the Code, more specifically section 14 (d) of the Code.

Clause -17. However, the validity of ipso facto clauses vis-à-vis

Section 14 of the Code, has been dealt with in detail by the Hon'ble

Supreme Court in Gujarat Urja (supra), and the Supreme Court has

conclusively decided that ipso facto clauses are not contrary to the

Code. The Supreme Court observed in this case that "Even more

crucially, [the Adjudicating Authority's jurisdiction] cannot even be

invoked in the event of a legitimate termination of a contract based

on an ipso facto clause like Article 9.2.1(e) herein, if such

termination will not have the effect of making certain the death of

the corporate debtor. As such, in all future cases, Adjudicating

Authority would have to be wary of setting aside valid contractual

terminations which would merely dilute the value of the corporate

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 125 of 213 debtor, and not push it to its corporate death by virtue of it being

the corporate debtor's sole contract (as was the case in this matter's

unique factual matrix)."

18. The Supreme Court also noted in Gujara Urja (supra) in respect

of ipso facto clauses that "In the absence of an express prohibition

by the legislature, it can be argued that there is no general embargo

on the operation of such clauses if they are part of a valid contract

under the Contract Act."

19. Additionally, Section 14 of the Code specifically sets out the

kinds of licenses that may not be terminated on grounds of

insolvency, i.e., a license, permit, registration, quota, concession,

clearances or a similar grant or right given by the Central

Government, State Government, local authority, sectoral regulator

or any other authority constituted under any other law for the time

being in force. The TLA does not fall under any of those categories.

(Appeal, page no. 55).

21. The Hon'ble Supreme Court has clearly laid down in Gujarat Urja

(supra) that termination of licenses may be interfered with only if the

license in question is the "sheet anchor" of the Corporate Debtor and

that termination would have the consequence of "cutting the legs out

from under the CIRP" (para 152).

B. Submissions of the Respondent No.1

I. It was stated by the Ld. Sr. Counsel for the RP that the Appellant

("Electrolux"), a company incorporated in US, is the registered

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 126 of 213 proprietor of the trademark "Kelvinator" ("Trademark") which was

licensed to the Corporate Debtor via a Trademark License

Agreement dated 7th July, 2005 ("TLA"). The TLA was terminated

by Electrolux vide a letter dated 1 st September, 2018

("Termination Letter") on account of the initiation of insolvency

and change of control of the Corporate Debtor from the Promoters

(defined as Dhoot Family in the TLA) to the Resolution

Professional ("RP"). The RP objected to the said termination,

specifically on the grounds of moratorium under Section 14 of the

Code. Electrolux preferred an application (M.A. 527/ 2019) before

the Adjudicating Authority seeking a permanent injunction

against the Respondent from manufacturing the goods under the

Trademark and upholding the termination of the TLA.

II. It is Electrolux' case that the Adjudicating Authority Order is in

violation of principles of natural justice as it fails to record and

deal with the contentions and written submissions with regard to

M.A. 527 of 2021, thereby disposing off the application in an

unreasoned and arbitrary manner. It is submitted that the

Adjudicating Authority Order was passed by Adjudicating

Authority after hearing in detail and considering the submissions

of Electrolux, the RP and the Resolution Applicant. The

transitional arrangement provided by the Adjudicating Authority

is aimed towards the successful resolution of the Corporate

Debtor and in effect an opportunity to the Resolution Applicant

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 127 of 213 to manage the operations of the Corporate Debtor. The

Adjudicating Authority has provided a practical approach

towards the preservation of the assets of the Corporate Debtor

and has also further granted a liberty to the parties to reconsider

the terms and conditions of the TLA and decide upon the same in

due course. The intent and purpose behind the Adjudicating

Authority Order is evidently an attempt to resolve the disputes

between the parties and assist the Corporate Debtor towards a

successful resolution. [Para 8 - 10, RP's Reply].

III. It is submitted by Electrolux that the Adjudicating Authority

Order is contrary to the Supreme Court's decision in Gujarat Urja

Vikas Nigam Limited v. Amit Gupta & Ors. 1 ("Gujarat Urja"),

wherein it was held that termination of contracts on ground of

insolvency are liable to be interfered with only if it results in the

legs of the CIRP being cut off. It is submitted that the

interpretation provided by Electrolux to the judgment in Gujarat

Urja is unilateral and incorrect. The Supreme Court specifically

recognises the duties of the RP under Section 14 of the Code

which mandates preservation of assets, critical to preserve the

value of the Corporate Debtor and manage the operations of the

Corporate Debtor as a going concern and the same does not in

any manner affect the RP's duties to preserve and protect the

value of the assets of the Corporate Debtor. Further, the

judgment in Gujarat Urja does not deal with a situation as in the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 128 of 213 present case as the judgment only deals with cases regarding

validity of ipso facto clauses in relation to agreements forming a

"sheet anchor" of the Corporate Debtor and not with such clauses

in relation to residuary contracts providing licenses to the

Corporate Debtor adding value to the assets of the Corporate

Debtor - termination of which is specifically prohibited under

Section 14 of the Code. It is submitted that the judgement only

deals with contractual arrangements which are otherwise not

covered within Section 14 of the Code. [Para 20(l) and 20(m), RP's

Reply]. The termination of the TLA by Electrolux is contrary to

Section 14(1) of Code which specifically prohibits alienation or

disposing of the Corporate Debtor's assets or any legal right or

beneficial interest in such asset. As the purpose of the

moratorium includes preserving the Corporate Debtor's assets

during the CIRP, maximising their value and facilitating orderly

completion of the CIR process, the termination of license or any

such adverse action to the detriment of the Corporate Debtor is

in direct contradiction with the purpose and intent of the

moratorium under Section 14 of the Code. [Para 14 -16, RP's

Reply].

IV. It is submitted that the TLA adds value to the goods produced by

the Corporate Debtor and in effect is of value for the Corporate

Debtor. The RP has carried out his duties effectively and

protected the assets of the Corporate Debtor in the interest of

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 129 of 213 maximisation of value of the Corporate Debtor. Also, while

inviting the resolution plans, the RP had categorically mentioned

in the Information Memorandum the said termination of the TLA

by Electrolux. In any event, the implementation of the Resolution

Plan is not contingent upon the decision in the Application/

present Appeal preferred by Electrolux. It may be noted that it is

solely upto Respondent No. 2, if it intends to continue with the

production of goods pertaining to the TLA after the

implementation of the Resolution Plan, and the Resolution

Professional has no say on the same.

C. Submissions of the Respondent No.2/Successful Resolution Applicant (SRA):

I. The Ld. Counsel for the SRA (Respondent No.2) has

submitted that the Resolution Plan was approved by the

consolidated CoC of the CDs by a vote of 95.09 %. It is also

submitted that the Adjudicating Authority has disposed the

MA No. 527 of 2019 and observed as follows:

"11. As far IA 527 of 2019, praying

for use of Brand name "Kelvinator" is concerned, we are

of the considered view that the Agreement should

continue for at least a year from the date of approval of

the Plan as per the existing Terms and Conditions as a

transitional arrangement and subsequently it is upto the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 130 of 213 parties to decide on the same as per their mutual

understanding."

II. Clause 11.3 of the Resolution Plan (appearing at page 3

para 9 of the Respondent No.2 reply) states that "All

contracts including....licenses...which the CDs may be

eligible and which are subsisting or having effect

immediately before the order was passed by the

Adjudicating Authority, shall be endorsement, delivery or

recording of or by operation of Applicable Law pursuant to

the order of the Adjudicating Authority sanctioning the

Resolution Plan, and on this Resolution Plan becoming

effective be deemed to and continue to be valid and

subsisting contracts."

III. It is submitted that the Appellant had made a misplaced

argument that Clause 11.3 of the Resolution Plan is

applicable only to subsisting contracts and that the

Appellant has terminated the TLA prior to order of the

Adjudicating Authority admitting the section 7 petition

against the CD. The said argument of Appellant is factually

incorrect because as per Appellant's own letter of

termination dated 05.06.2018 (appearing age page 230 of

the Appeal paper Book), the termination of TLA "shall

become effective on the date on which the application for

CIRP is admitted by the Adjudicating Authority". Hence,

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 131 of 213 the TLA was subsisting on the date of the order of the

Adjudicating Authority admitting the Section 7 application

and also immediately before it. Therefore, as per Clause

11.3 of the approved Resolution Plan, the TLA continues to

be valid and subsisting.

IV. It is also submitted that the Appellant has allegedly

terminate the TLA vide its letter dated 05.06.2018 by

invoking clause 16.2(d)(iii) of the TLA. The Appellant has

thereafter issued a Letter dated 19.10.2018 (appearing at

page No.240 of the Appeal Paper Book), whereby, as an

afterthought, the Appellant has also included Clause

16.2(a) of the TLA as a ground for termination. It is

submitted that the events of termination mentioned in

Clause 16.2(a) and 16.2(d)(iii) are inconsistent with the

provisions of Section 14 of the Code, especially clause (d)

of subsection (1) thereof, which prohibits the recovery of

"any property" (in this case the trademark) by an owner (in

this case the Appellant) where such property is occupied by

or in the possession of the CD (in this case the R-1).

V. In view of the above, it is submitted that Clause 16.2(a) and

16.2(d) (iii) of the TLA are null and void upon the enactment

of the Code and the Appellant cannot rely on the said

clause to terminate the TLA. Rely on the decision in Gujarat

Urja (supra), the Appellant argues that all agreements,

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 132 of 213 other than those which are the sheet anchor of CD, can be

terminated on mere initiation of CIRP. It is submitted that

such interpretation of the decision in Gujarat Urja (supra)

by the Appellant is wholly incorrect and without basis. It is

submitted that if the interpretation of the Appellant is

accepted, it would lead to an abysmal situation where most

(if not all) contracts of a CD will be terminated on mere

initiation of CIRP, which in turn would gravely impact the

going concern status of CIRP, apart from also degrading the

asset value of the CD. It is submitted that the Hon'ble

Supreme Court in Gujarat Urja (surpa) has recognized the

importance of maintaining the going concern status of the

CD and has specifically left open the broader issue of

validity of ipso facto clause for the legislature to look into.

Hence, the argument made by the Appellant is wholly

unsubstantiated and misleading. Further, the argument of

Appellant is plainly contrary to Section 14 of the Code.

VI. It is also submitted that the Applicant has relied on the

Reply of RP to state that the Information Memorandum has

disclosed that the TLA was terminated. The said fact does

not further the case of Appellant in any manner because

the RP has merely stated a fact that the TLA was

terminated by Appellant and, such mere statement, does

not make the termination valid in law. In fact, had the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 133 of 213 termination become valid in view of what is stated in the

Information Memorandum, the Appellant would have had

no occasion to file the MA seeking declaration that the

termination was valid. Hence, the case set out by the

Appellant is without basis and untenable. Lastly, it is

submitted that the argument of Appellant that the

trademark was not in use for a period of last two years is

wholly irrelevant as the CD was in CIRP during such time

and mere allege non-usage of the trademark during CIRP

would not ipso facto make an otherwise illegal termination

a valid one.

18. Company Appeal (AT) (Ins) No. 650 of 2021:

A. Submissions of the Appellant- Venugopal Dhoot.

I. The Ld. Sr. Counsel for the Appellant has submitted that the

Appellant is the guarantor shareholder and ex-managing

Director/Chairman of Videocon Industries Limited and is

interested entity of the CD and its stakeholders. What has

been stated by the Appellant is that all assets owned by

Videocon Group, particularly, foreign oil and gas assets are

not included in the 'Information Memorandum' as also no

valuation thereof has been considered while the claim of

lenders of foreign oil and gas assets of Rs. 23,120.90 Crore

being considered as claimed upon CD.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 134 of 213 II. It was also stated by Ld. Sr. Counsel, the reason for

considering consolidated group insolvency resolution with

main thrust on foreign oil and gas assets not to be treated

separately so that all the creditors should get maximum value.

The RP and CoC have committed material irregularity of high

magnitude in ignoring to include foreign oil and gas assets of

VIL as assets of VIL. They have also raised the issue that just

by paying only Rs.262 Crore (out of which cash balance

available with CD is Rs. 200 Crore) & approximately Rs. 2700

Crore through NCD carrying 6.65% p.a. payable annual

interest rate, the Resolution Applicant will get possession of

all 13 CDs to run these units against the property for which

claim has been raised for over Rs.71,000/- Crore. Although

the Appellant is not privy to CoC minutes, however, in the

impugned order makes it clear that RP has not maintained

confidentiality clause in its true letter and spirit and thereby

violated Regulation 35 (3) of the IBBI (Insolvency Resolution

Process or Corporate Persons) Regulation, 2016, copy of

Resolution Plan was not provided to the Appellant being Ex-

Managing Director of the Chairman of VIL apart from being

guarantor. As per the valuation reports, the fair value of CD

was Rs.4069.65 Crore, whereas the liquidation value was

Rs.2568.13 Crore. Therefore, it is evident that the interest of

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 135 of 213 the CDs has been compromised and no attempt has been

made to maximize the wealth of the CDs.

III. They have also pointed out that Adjudicating Authority at para

10 of the impugned order further observed that such a large

number of Authorized Representative for the RP at the meeting

of CoC indicates either he was not fully prepared or the same

was designed to fetch monetary benefit (fees) to these

Representatives. Hence, the RP and his team never attempted

to achieve the maximization of value of the 13 CDs. Rather,

the RP and their appointed agencies discharged their duties

negligently and contributed in eroding the net worth of the

entire Group by not maintaining the companies as a going

concern. Therefore, after observing material irregularity in

exercise of powers by Respondent No.1 and CoC, the

Adjudicating Authority ought not to have approved the

Resolution Plan of R-3 in the CIRP of Corporate Debtor. The

SBI is attempting to include the foreign oil and gas assets of

VIL as assets of VOVL in the CIRP of VOVL. However, the same

will be contrary and contradictory to the stand taken by SBI

in the case of VIL as VOVL also holds the said foreign oil and

gas assets through the foreign companies incorporated for

that purpose. The said fact is clear from the IM of VOVL issued

by the RP of VOVL.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 136 of 213 IV. It is stated that Minutes of meeting of SBLC lenders in respect

of VOVL on 26.03.2018 (page No.76 of rejoinder to R-1) clearly

records that SBI being already aware that CIRP will be

initiated against VIL and that the shareholding of VIL in VOVL

shall be taken under control by the RP, deliberately took active

steps to keep the said foreign oil and gas assets outside the

purview of the CIRP of VIL. Similarly, a bare perusal of the

minutes of meeting of MD and CEO of SBLC Lenders on

13.06.2018 (appearing at page no.84-85 of the rejoinder to R1)

indicated that SBI deliberately transferred the shares of VIL in

VOVL and VHHL in favour of SBICAP Trustee Company

Limited so as to sequester the foreign oil and gas assets from

the CIRP of VIL. Valuation of standalone foreign oil and gas

assets was at 4.29 billion USD in 2017, the value was

projected at 5.08 Billion USD in 2019, 5.61 Billion USD in

2020 and 7.02 Billion USD in 2023 (appearing at page no.101

of rejoinder to the reply of R1). Therefore, it is evident that if

the said assets would have been included in the CIRP of the

CDs then the same would have resulted in maximization of

wealth of the CDs. However, SBI, in order to have an edge over

the other creditors and to have benefit of such valuable foreign

oil and gas assets, in collusion with the RP, made sure that

the said foreign oil and gas assets are excluded from this CIRP.

All the assets and liabilities of VHHL, VINI, VEBL and other

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 137 of 213 subsidiaries of VOVL have been specifically included in the IM

VOVL. However, in VIL's IM and the consequent resolution

plan, the assets of its subsidiaries i.e. VOVL have not been

included despite admittedly VIL being the ultimate

beneficiary. Commercial wisdom exercised by CoC is arbitrary

and irrational and does not reflect any application of mind.

'Stakeholders' under the Resolution Plan submitted a claim of

Rs. 71,433.75 crore, the amount admitted by the RP is Rs.

64,938.63 Crore and the amount provided under the plan to

the Stakeholders is Rs.2,962.02 Crore i.e. the amount

provided to amount claimed percentage is 4.15%, the reflects

that the stakeholders have a loss of 96% i.e. the haircut is

approx.96% (Page No.76 of the Appeal Paper Book). CoC did

not consider the proposal of Appeal to the tune of Rs. 41,334

Crore which was 10 times higher than the resolution plan of

R-3 and provided for payment of entire debt and submitted at

an early stage of the process. But CoC accepted resolution

plan of R-3, which provides payment of Rs.2,962 Crore against

the total debt of 31,789 Crore. Therefore, the CoC under the

guise of commercial wisdom cannot do an illegality and

approve a resolution plan detrimental to the interests of the

CDs and their stakeholders.

V. It is submitted that resolution plan as approved by the

Adjudicating Authority discriminates amongst the Secured

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 138 of 213 Financial Creditors of same class. The Secured Financial

Creditors who cast vote in favour of Resolution plan are

being offered 4.89% repayment whereas Secured Financial

creditors who did cast vote in favour of resolution plan are

being offered 4.56% repayment. In terms of Resolution plan,

one set of OC i.e. workmen and employees are being offered

29.73% repayment of their admitted dues whereas other set of

OCs i.e. Government and other OCs are being offered only

0.12% repayment of their admitted dues. The Adjudicating

Authority after coming to conclusion that interest of OCs has

not been taken care of in the Resolution Plan instead of

sending it back to CoC for reconsideration has approved the

same and requested CoC to increase the payout to CoC. Thus,

the Resolution plan as approved by the Adjudicating Authority

is discriminatory and violative of the provisions of the Code

itself as it discriminates between same class of creditors. The

Resolution plan of R-3 provides for a massive 99.28%

haircut to OCs and 95.85% haircut to all its creditors as

was also observed by the Adjudicating Authority in the

impugned order itself at para 5.

VI. It is stated that the SBI is blowing hot and cold under the same

breath as at one stage i.e. for the purpose of consolidation, SBI

requested for consolidation order in order to have common

pool of assets for maximization of value of CDs whereas on the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 139 of 213 other hand SBI invited interest for sale of foreign oil and gas

assets and is contesting upon inclusion of same is common

pool of assets. The RP failed to examine whether the resolution

plan is in compliance of section 30(2) of the Code and a non-

complaint resolution plan was placed by the RP before the CoC

for their deliberation/approval. The RP ought to have taken

active steps to have the appeals dealing with inclusion of

foreign oil and gas assets pending before this Appellate

Tribunal adjudicating at the earliest.

VII. It is also stated that it needs to be considered if

Resolution Professional and their appointed agencies were

concerned only with drawing their remuneration to the

extent of Rs. 1.5 crore per month, without discharging the

duties to maintain the Corporate Debtors as going concern

and prevent eroding value of assets of Corporate Debtors?

It needs to be considered as to what are the reasons of arriving

at such low liquidation value when for the same assets for

restructuring the same lenders and experts were agreeing on

much higher valuation and particularly the Appellant was

ready and willing to take the company back without any hair

cut?

B. Submissions of the Respondent No.1 - RP

I. It is stated by the Ld. Sr. Counsel for the RP that captioned

Appeal deserves to be dismissed on grounds that (a) the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 140 of 213 appellant has no locus in his capacity as a guarantor,

shareholder and former Managing Director/Chairman of VIL

to maintain the captioned appeal as rejection of the

Appellants' proposal under Section 12A of the Code is not

challenged and binding on the Appellant, (b) the RP has duly

examined the resolution plan and determined that it confirms

to requirements under Section 30 of the Code and Regulations

thereunder, (d) the Appellant has sought to assail the

commercial wisdom of the CoCs, (e) the RP has not committed

any material irregularity in not treating the foreign oil and gas

assets as assets of VIL, (f) it is settled by this Appellate

Authority that the RP has not breach any confidentiality

clause, (g) there is no discrepancy regarding actual value, fair

value and liquidation value of the CDs, and (h) the

generic/cryptic allegations of fraud/collusion by the

Resolution Professional are baseless. The captioned appeal

deserves to be dismissed in limine on account of being

preferred by the Appellant without any locus as he has failed

to show how is aggrieved by the impugned order in his

capacity of a guarantor, shareholder and former Managing

Director / Chairman of VIL. In the garb of challenging the

impugned order, the Appellant has prayed for reconsideration

of his 12A proposal which is not permissible either in law or

facts. The Appellant's 12A proposal was duly considered by

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 141 of 213 the CoC in its 19th meeting and was rejected by an

overwhelming majority of 98.14%. considering that the

Appellant neither challenged such rejection nor raised any

objections to the Resolution plan before the Adjudicating

authority, the Appellant has no locus to seek re-consideration

of 12A proposal before this Appellate Tribunal. As recognized

by this Appellate Tribunal in Vishal Vijay Kalantri Vs. Shailen

Sbab in CA(AT) (Ins) No. 466 of 2020, in para 9, 11 and 12, an

ex-promoter has no locus to challenge approval granted to a

resolution plan, even if he seeks reconsideration of his rejected

12A proposal on the basis that the settlement proposal is

superior to the approved resolution plan. It is submitted that

the Appellant has failed to demonstrate any provision of the

Code and /or the Regulations thereunder, which would entitle

the Appellant to seek acceptance of his 12A proposal by the

CoC as a matter of right. As recognized by the Hon'ble

Supreme Court in Swiss Ribbions Pvt. Ltd & Ors. Vs. Union of

India & Ors. AIR 2019 SC 739 (para 38, 121), the requirement

of seeking approval for majority of the CoC implies that those

proposing the settlement cannot claim it as a matter of right.

Since Section 12A proposal is a "settlement/withdrawal"

mechanism, the Appellant cannot seek re-consideration of the

proposal on the same lines as a resolution plan. The RP has

acted in accordance with the Code and had no occasion to

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 142 of 213 treat the foreign oil and gas assets as part of VIL's assets in

view of the stay order. At the outset, it is important to highlight

that the RP only acted within the ambit of duties/powers

conferred upon it by the Code and its CIRP Regulations.

Pertinently, under Section 18(f) of the Code r/w Section 23(2)

of the code, a RP is under the mandate to take control and

custody of any asset over which the CD has ownership rights

as recorded in the balance sheet of the CD. However,

Explanation (b) to Section 18 of the Code specifically excludes

the assets of any Indian or foreign subsidiary of the CD from

the purview of the terms 'assets' as mentioned in Section 18.

Accordingly, the RP took control and custody of such assets

over which VIL has ownership rights as record in the

standalone balance sheet of VIL in compliance with Section

18(f) R/w Explanation (b), and Section 23(2) of the Code,

excluding assets of any Indian or foreign subsidiary of VIL.

II. It is also stated that the RP has not committed any material

irregularity and he is not guilty of incompliance with the

Consolidation order passed by the Adjudicating Authority for

the following reasons:

a. While the RP was in the process of analyzing the

implications of the Consolidation order passed on

12.02.2020, it was stayed vide order dated 19.02.2020

passed by this Appellate Tribunal in CA(AT) (Ins) No. 299

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 143 of 213 of 2020 and no further steps could be taken by the RP in

pursuance of the Consolidation order. Therefore, Appellant

cannot assert that the RP ought to have treated the foreign

oil and gas assets as VIL's assets as this would have led to

contempt of the stay order passed by this Appellate

Tribunal.

b. Pertinently, the Appellant can't take benefit of the direction

in the stay order which continues the interim order dated

22.08.2020 passed by the adjudicating Authority, since the

interim order was continued only to the limited extent that

it prohibited SBI from proceeding with the sale of upstream

foreign oil and gas assets with passing of the Consolidation

order, all findings relied upon by the Appellant have been

merged into the consolidation order, which continues to be

stayed by this Appellate Tribunal.

c. The facts stated in the limited reply filed by the RP to

CA(AT) (Ins) No. 299 of 2020 highlighted the reasoning and

factors on account of which the RP couldn't have treated

the assets of its wholly owned Indian subsidiary, VOVL,

and other foreign entities, VHHL, VEBL and VINI, which

have not been reflected in standalone financial statements

of VIL as its assets, as VIL's assets for the purpose of VIL's

CIRP in view of Explanation (b) to Section 18 of the Code

and the subsistence of the stay order.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 144 of 213 III. Further, the relief sought by the Appellant seeking issuance of

fresh information memorandum and call for fresh

EOI/Resolution Plan for all assets of Videocon group including

all foreign oil and gas assets of Videocon Group is subject

matter of CA(AT) (Ins) No. 299, 467, 639, 640 of 2020, pending

before this Appellate Tribunal, and thus cannot be entertained

in the present appeal. Additionally, the allegation that the RP

inflated the liabilities of the CD is misconceived. The RP has

admitted those claims of other entities creditors filed with him

and to such extent that they relate to security interests created

in favour of these creditors by the CDs being cross-

collateralized and corporate guarantee claims in accordance

with the Code and Regulations thereunder. The Appellant has

provided no substantiation to his bald allegations, the

Respondent reserves its rights and would be happy to provide

a detailed explanation for each admitted claim if deemed

necessary by this Tribunal.

IV. It is also stated that the Appellant's contention that the RP has

failed to examine whether the Resolution Plan is compliant or

not is totally devoid of merit and untenable both in law and

facts. It is submitted that the resolution plan is complaint with

Section 30(2) of the Code and the IBBI(Insolvency Resolution

Process for Corporate Persons) Regulations, 2016. In this

regard it is submitted that (a) the RP found the resolution plan

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 145 of 213 to be complaint with the Code and regulations, as captured in

Form-H and the Plan Approval application, (b) the Resolution

Plan and the Distribution Mechanism has been approved by

the CoC by an overwhelming majority of 95.09% in exercise of

their commercial wisdom and (c) the adjudicating authority

correctly relying upon K Sashidhar Vs. Indian Overseas Bank

& Ors. and Essar Steel India Ltd. Committee of Creditors Vs.

Satish Kumar Gupta has categorically found the resolution

plan to be compliant with the Code and CIRP Regulations and

upheld the commercial wisdom of the CoC. As regards, the

allegations in respect to differential payments being meted out

to different classes and sub-classes of creditors, it is important

to highlight that the Appellant has no locus to espouse the

cause of creditors of VIL specifically when the Appellant has

failed to demonstrate how is his rights are adversely affected

by it.

V. It is also stated that the RP, in accordance with the Code and

CIRP Regulations, appointed two reputed valuers, who were

glistered with the IBBI and didn't have any vested interest in

the property being valued, for the purpose of valuation of the

CDs. The resolution plans were received on a confidential

basis in electronics encrypted from on 31.08.2020. The index

pages of the resolution plans were opened on 02.09.2020. The

valuation reports, received by the RP on a confidential basis

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 146 of 213 over email on 02.09.2020 were directly uploaded in the

Virtual Data room on the night of 02.09.2020. Hence, there

was no occasion for anyone to know about the liquidation

value, since the liquidation value was received on 02.09.2020,

after receipt of the resolution plan on 31.08.2020. The

liquidation value of was also mentioned in the Form-H

submitted before the Adjudicating Authority alongwith the

plan approval application. Thus, there is no discrepancy

regarding actual value, fair value and liquidation value of the

CDs. The generic, vague and cryptic allegations of material

irregularity and fraud/collusion by the RP are baseless and

denied in seriatim. With regard to applications filed under

Section 43, 45 & 46 of the Code, the RP filed these

applications, in exercise of its statutory duty under Section

25(2)(j) of the Code R/w Regulation 35A of the CIRP

Regulations. The Appellant's allegations disputing its

evidentiary value are baseless and extraneous to the present

appeal.

B. Submissions of the Committee Creditors of Consolidated

Videocon Group of Companies:-

I. It is stated by the Ld. SG that the instant appeal has filed by the

Appellant is a part of a long-drawn strategy of the Appellant herein

to disrupt the successful and smooth functioning of the CIR Process

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 147 of 213 of Consolidated Corporate Debtors. It is submitted that Videocon

Industries Limited and Videocon Telecommunications Limited were

2 (two) of the largest accounts that were classified as non-performing

assets by banks on account of the defaults and in respect of whom,

the Reserve Bank of India ("RBI") had provided specific instructions

for initiating insolvency proceedings pursuant to the provisions of

Section 35AA of the Banking Regulation Act, 1949, as amended. It

is submitted that RBI had sent a letter to SBI in its capacity as Lead

Bank ("RBI Letter"), directing to provide the companies classified as

'Non-performing assets' as per the data maintained by the Central

Repository of Information on Large Credits (as listed in the annexure

to the RBI Letter, which included inter alia VIL and VTL), time till

December 13, 2017 to resolve their debts outside the scheme of the

IBC, failing which insolvency proceedings under the IBC are to be

initiated against the companies before December 31, 2017. Since the

accounts of VIL and VTL could not be resolved pursuant to the RBI

Letter and on account of the continuing default, the application to

initiate CIR Process was filed on 1st January, 2018 against VIL and

VTL. It is submitted that the Appellant raised various frivolous

contention resisting the admission of applications against VIL and

VTL on account of which it took a considerable time of more than 5

months before the admission of the application against VIL and VTL.

This delay in the admission process itself, caused on account of the

litigation by the Appellant, was the starting point which has caused

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 148 of 213 tremendous delay in the CIRP of the Consolidated Corporate Debtors

and resulted in deterioration of value of the assets of the

Consolidated Corporate Debtors and which has resultantly caused

tremendous loss in recovery by the various stakeholders of the

Consolidated Corporate Debtors. The conduct of the Appellant, as

shown hereinafter, adequately demonstrates the Appellant's ill-

intent and mala fide not only to mislead this Hon'ble Tribunal but

also to misuse the judicial process in its attempt to continuously

frustrate the CIR Process of the Consolidated Corporate Debtors.

II. It is submitted that the Appellant, Mr. Venugopal Dhoot, who is

admittedly the ex-promoter cum chairman of Videocon Industries

Limited ("VIL"), the parent company of the Videocon Group of

Companies, is directly responsible for the insolvency of the Videocon

group companies on account of, inter alia, his poor management. It

is pertinent to bring to the attention of this Hon'ble Tribunal that

State Bank of India had initiated personal insolvency proceedings

against the Appellant herein by filing an application under Section

95 of the Code on 1st September 2020. The application for initiation

of personal insolvency against the Appellant herein in his capacity

as a personal guarantor to the debts owed by VIL has been allowed

by the Hon'ble Adjudicating Authority vide its order dated 1 st

September 2021. It is stated that filing of the instant Appeal by Mr.

VN Dhoot, therefore, is without any basis and is non-maintainable

under the Code on account of the initiation of personal insolvency

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 149 of 213 proceedings against him and since it is preferred merely to scuttle

the CIR Process of the Consolidated Corporate Debtor and misuse

the same to create hindrances in the personal insolvency

proceedings before the Hon'ble Adjudicating Authority. The

Respondent No. 2 respectfully submits that the instant Appeal

contains several false, unfounded, bald, vague and inaccurate

statements/ averments which are in the form of allegations against

the lenders. Such allegations are totally devoid of any merit.

III. It is submitted that the present Appeal deserves to be dismissed in

limine and ought to be dismissed on, inter alia, the following

grounds:

a. The Appellant lacks the locus standi to file the

present Appeal as the Appellant cannot be

considered to be an aggrieved person under

Section 61 of the Code. The Appellant after

having made all attempts to frustrate the

successful resolution of Consolidated

Corporate Debtors is merely attempting to

further derail and disrupt the CIR Process of

the Consolidated Corporate Debtors in gross

abuse of the process and in complete

contravention of the object of the Code.

b. The Appellant's conduct in initiating various

litigations before various forums from time to

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 150 of 213 time belies his assertion that he has co-

operated in the initiation of insolvency

proceedings of the Consolidated Corporate

Debtors, when, in fact, it was the Appellant's

incessant litigation that has caused

tremendous delay in the conclusion of the CIR

Process which has consequently led to value

deterioration;

c. The Respondent No. 2 has conducted the CIR

Process strictly in accordance with the

provisions of the Code and the Insolvency and

Bankruptcy Board of India (Insolvency

Resolution Process of Corporate Persons)

Regulations, 2016, as amended ("CIRP

Regulations";

d. The rejection of the Appellant's proposal for

Restructuring of Domestic Assets of Videocon

Industries Limited and other Co-Obligors

("Appellant's Withdrawal Proposal") by the

Respondent No. 2 was in its commercial

wisdom and taken after due consideration of

the Appellant's Withdrawal Proposal by the

Respondent No. 2;

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 151 of 213 e. The Appellant is belatedly trying to challenge

the rejection of his Appellant's Withdrawal

Proposal with an ulterior motive only known to

him;

f. The Appellant has no locus to champion the

issues on behalf of the dissenting financial

creditors or other creditors after being the

reason for the mismanagement and the

instant insolvency of the Consolidated

Corporate Debtors .

IV. It is submitted before this Tribunal that the Appellant lacks the locus

standi to file the instant Appeal. As per Section 61 of the Code, only

an "aggrieved person" can file an appeal assailing the order of the

Adjudicating Authority. The Appellant cannot in any way be

considered to an "aggrieved person" qua the Impugned Order. It is

submitted that an individual whose own actions and inactions have

contributed and continue to contribute to the financial illness of the

Consolidated Corporate Debtors and whose actions and inactions

run contrary to his claims of value maximisation in the interest of

creditors and best intention for the resolution of the Consolidated

Corporate Debtors, ought not to be allowed to now challenge the CIR

Process throughout the CIR process of the Consolidated Corporate

Debtors, the Appellant has made all possible endeavors to frustrate

and derail the CIR Process and thwart all attempts of a successful

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 152 of 213 resolution of the Consolidated Corporate Debtors thereby

jeopardizing the interest of all stakeholders and defeating the very

objects of the Code. The Appellant has filed numerous litigations in

a gross abuse of the process with the sole intention to disrupt the

CIR Process and frustrate smooth conclusion of the CIR Process. It

is a matter of record that the Appellant's acts of commission and

omission while in control of the Consolidated Corporate Debtors are

being investigated by several investigating agencies. Furthermore,

Appellant's instant challenge to the Impugned Order is unmerited

inasmuch it is squarely covered by this Hon'ble Tribunal judgment

in Mr. Vishal Vijay Kalantri vs. Mr. Shailen Shah (Resolution

Professional of Dighi Port Limited) & Ors., CA-AT (Ins) No. 466 of

2020 ("Vijay Kalantri"). In Vijay Kalantri, this Hon'ble Tribunal was

faced with similar fact situation as there as well the 12A settlement

proposal of the promoter was rejected by the CoC with 99.68% vote

while the resolution plan of one resolution applicant was approved

by 99.68% vote. While dismissing the promoter's challenge to the

approval of the resolution plan and rejection of its 12A proposal, this

Tribunal observed that the averment that 12A proposal is better as

regards maximisation of the value of the assets of the Corporate

Debtor and subserves the interest of all stakeholders, is not to be

accepted. Therefore, the Appeal does not merit any consideration of

this Hon'ble Appellate Tribunal and ought not to be allowed and

should be dismissed with exemplary costs. The Appellant's conduct

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 153 of 213 in initiating various litigations before various forums from time to

time belies his assertion that he has cooperated in the initiation of

insolvency proceedings of the Consolidated Corporate Debtors,

when, in fact, it was the Appellant's incessant litigation that has

caused tremendous delay in the conclusion of the CIR Process which

has consequently led to value deterioration.

V. The Appellant's attempts of disrupting and derailing the CIR Process

of the Consolidated Corporate Debtors are evident from the below

mentioned list of proceedings initiated by it:

a. Resisting the Section 7 Applications for initiation of CIR Process

against VIL and VTL: The Appellant, on behalf of the Corporate

Debtor, had raised several grounds opposing the initiation of the

CIR Process against VIL and VTL. The objections of the Appellant

are evident and referred in the Adjudicating Authority Order

dated 06.06.2018 and 11.06.2018 whereby the insolvency was

admitted against VIL and VTL respectively. The Appellant is

deliberately attempting to mislead this Tribunal by stating that

he had co-operated and supported the insolvency proceedings of

Consolidated Corporate Debtors;

b. Stay on the EOI process of VIL: the erstwhile Resolution

Professional of VIL, namely Anuj Jain, had invited expression of

interest ("EOIs") from prospective resolution applicants. However,

the Appellant filed an application before the Adjudicating

Authority seeking transfer of insolvency proceedings against

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 154 of 213 Videocon Group of Companies to a single bench of Adjudicating

Authority. Due to this, the Adjudicating Authority had directed

the then Resolution Professional of VIL, namely Mr. Anuj Jain, to

temporarily defer the CIR Process of VIL and wait for the decision

of the Adjudicating Authority;

c. Seeking inclusion of foreign oil and gas assets held by foreign

subsidiaries of VIL in the CIR Process of VIL: More than a year

after initiation of CIR Process against VIL and 12 group

companies, Appellant filed two separate applications seeking

similar reliefs, bearing MA No. 2385 of 2019 and MA No. 2620 of

2019, for inclusion of the foreign oil & gas assets held by the

foreign incorporated subsidiaries of VIL in the CIR Process of VIL.

It is pertinent to note that even during the consolidation

proceedings leading upto the Order dated 8 August 2019, the

Appellant did not raise any averment about inclusion of foreign

oil and gas assets in the CIRP of Consolidated Corporate Debtors.

These MAs came to be filed only after almost a year after initiation

of CIR Process against VIL and 12 group companies, with the sole

intention to delay and derail the CIRP of Consolidated Corporate

Debtors. The said MAs were contested by the lenders, inter alia,

on the ground of it being ultra vires the provisions of the Code

inasmuch as the Code has no extra-territorial application over

such foreign incorporated subsidiaries and the assets held in

subsidiaries of Videocon Industries Limited. Despite this, the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 155 of 213 Adjudicating Authority vide 12.02.2020 Adjudicating Authority

Order (defined below) directed inclusion of the foreign oil and gas

assets in the CIR Process of VIL. However, the said 12.02.2020

Adjudicating Authority Order was appealed against and was

stayed by this Tribunal vide Order dated 19.02.2020;

d. Seeking consolidation of CIR Process of VIL with the CIR Process

of VOVL: Appellant also filed an application being MA No 3944 of

2019 ("MA 3944") for consolidation of the CIR Process of VOVL

with the CIR Process of the Consolidated Corporate Debtors, and

as an interim measure, sought for a stay on the CIR Process of

VOVL and the CIR Process of Consolidated Corporate Debtors.

e. Seeking withdrawal of the CIR Process of Consolidated Corporate

Debtors: The Appellant had also submitted a Form FA dated

August 31, 2020 to the Resolution Professional of Consolidated

Corporate Debtors seeking withdrawal of the CIR Process of

Consolidated Corporate Debtors. It was clarified to the Appellant

at the 16 th meeting of the CoC held on 7 th September, 2020

that the Appellant's Form FA cannot be accepted since he was

not an 'applicant' within the meaning of Section 12A of the IBC

and Regulation 30A of the CIRP Regulations. Whilst the legal

position was amply clear, the Appellant nevertheless filed an

application before the Adjudicating Authority seeking directions

to the Resolution Professional to consider its Form FA. It is

submitted that eventually since the Respondent No. 2, to

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 156 of 213 maintain fairness and transparency in the process and keeping

in mind the larger interest of all the stakeholders, decided to

consider the Appellant's Withdrawal Proposal of the Appellant,

this particular application was later withdrawn.

VI. The Respondent No. 2 contested the litigations initiated by the

Appellant in good faith and on merits to ensure that the CIR Process

of the Consolidated Corporate Debtors is not affected. Further, it is

submitted that the financial creditors have also initiated recovery

proceedings against the promoters, namely the Appellant herein and

his brothers namely Mr. Pradeepkumar N. Dhoot ("Mr PN Dhoot")

and Mr. Rajkumar N. Dhoot ("Mr. RN Dhoot"), who are also the ex-

promoters of Videocon group companies and personal guarantors to

the debts of the Consolidated Corporate Debtors, before the Debt

Recovery Tribunals. SBI has also initiated personal insolvency

proceedings against these promoters, and the insolvency petition

filed by State Bank of India has been admitted against Mr. VN Dhoot

vide order dated 01.09.2021. Even under these proceedings, the

Appellant and his brothers, instead of clearing off the dues owed to

the financial creditors, have employed all possible tactics to delay

and frustrate the judicial process, including but not limited to:

A. Appellant and other related promoters, namely Mr. RN Dhoot and

Mr. PN Dhoot, have been constantly delaying and frustrating the

DRT recovery proceedings initiated against them by, inter alia,

evading service;

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 157 of 213 B. Similarly, before the Adjudicating Authority in the personal

insolvency proceedings, Mr. RN Dhoot attempted to evade service

of the insolvency petition. Three separate personal insolvency

proceedings were filed against three personal guarantors namely

Mr. RN Dhoot, Mr. VN Dhoot and Mr. PN Dhoot before

Adjudicating Authority Mumbai, which were pending before

different benches Inspite of there being no correlation between

the three personal insolvency proceedings, with the sole intention

to cause further delay, Mr. RN Dhoot had also filed a transfer

petition seeking transfer of all the personal insolvency

applications before a single bench of the Mumbai Bench of the

Adjudicating Authority that has been dealing with the CIR

Process of Consolidated Corporate Debtors, on baseless and

untenable grounds.

C. The Appellant herein has also attempted to evade service of the

letter prepared by the Resolution Professional in accordance with

Section 99 of the Code. Further, prior to that, on Adjudicating

Authority reserving the order on the insolvency petition against

the Appellant, the Appellant filed the petition before the

Adjudicating Authority and sought unreserving of the order on

the insolvency petition, but the insolvency petition stood allowed

vide order dated 01.09.2021.

D. Furthermore, while the insolvency petitions were pending

adjudication before the Adjudicating Authority, the Appellant,

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 158 of 213 Mr. RN Dhoot and Mr. PN Dhoot filed separate and independent

Writ Petitions before the Hon'ble Supreme Court challenging the

constitutionality of Personal Guarantor Insolvency Process under

the Code. The said challenge was dismissed and the Personal

Guarantor Insolvency Process was upheld.

VII. Further, it is interesting to note that in several of these pleadings as

well as in their communications, the Appellant has made sweeping

and inconsistent factual and legal statements/ averments. For

instance, VOVL Limited (which is not part of the Consolidated

Corporate Debtors) had approached the Hon'ble Supreme Court by

filing a Writ Petition (bearing number Writ Petition(s) (Civil) No(s).

1138/2018) under Article 32 of the Constitution of India on

September 17, 2018 ("Writ Petition"), seeking to ensure that CIR

Process was not initiated against VOVL pursuant to the mandatory

directions of the RBI in terms of its circular dated 12th February

2018. The Writ Petition was affirmed and executed by the Appellant

herein on behalf of VOVL. It is submitted that the Writ Petition, inter

alia, mentioned that the Oil & Gas Assets belonged to VOVL and

further that initiating CIR Process pursuant to the 12th February,

2018 circular of RBI will erode the value of the assets of VOVL and

would in turn be detrimental to the lenders of VOVL. It is pertinent

to note that nowhere in the Writ Petition did VOVL take the ground

that Oil & Gas Assets could not be proceeded against since they were

the assets of VIL, and hence, covered under the moratorium declared

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 159 of 213 under Section 14 of the Code. Further, interestingly, the resolution

professional of VIL was not involved by VOVL, the Appellant, Mr. P.

N. Dhoot and Mr. R. N. Dhoot at any point in time in relation to the

foreign Oil & Gas Assets. In the Writ Petition, VOVL did not raise any

contention that the Oil & Gas Assets belong to VIL and hence should

be resolved under the ongoing CIR Process of VIL (which had

commenced on 6th June 2018) at the time of filing the Writ Petition.

However, in July 2019, viz., after a lapse of almost 10 months from

the date of filing of the Writ Petition, the Appellant filed MA 2385 of

2019 before the Adjudicating Authority praying that the foreign oil

& gas assets belong to VIL.

VIII. The Resolution Professional placed 2 compliant resolution plans

before the Respondent No. 2 for approval, out of which the

Respondent No. 2 approved the resolution plan of Respondent No. 3

with 95.09% voting share. It is submitted that extensive discussions

and deliberations were held with all resolution applicants.

IX. It is submitted that the Appellant cannot claim consideration of its

12A proposal as a matter of right. In fact, the very person who is

directly responsible for the present condition of the Consolidated

Corporate Debtors and the extensive losses being suffered by all the

stakeholders of the Consolidated Corporate Debtors does not have

any vested or fundamental right for this Appellant's Withdrawal

Proposal or any settlement proposal being considered. The

consideration of any proposal for withdrawal is solely and entirely

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 160 of 213 subject to the discretion of the Committee of Creditors under the

scheme of the Code.

X. Despite the Appellant having no locus standi whatsoever to submit

a proposal for withdrawal under Section 12A of the Code, the

Respondent No. 2, with a view to ensure fairness and transparency

in the process and to ensure that any decision of the Respondent

No. 2 is not challenged as being arbitrary and also to avoid any

further litigations in the CIR Process which could have resulted in

further delay in the conclusion of the process, decided to consider

the proposal of the Appellant. The Appellant's Withdrawal Proposal

was discussed and deliberated at the 17th meeting of the CoC held

on 23rd September, 2020. The Appellant herein and his brother, Mr.

P.N. Dhoot (collectively referred to as the "Promoters") were

requested to make a brief presentation to apprise the Respondent

No. 2 briefly on the contents of the Appellant's Withdrawal Proposal.

Several clarifications and queries were raised by few of the CoC

members at the said 17th meeting of the CoC held on 23rd

September, 2020. The queries were shared subsequently shared

with the Promoters vide e-mail dated 24th September, 2020 by the

Applicant and the Promoters provided their responses to the same

vide an email dated 24th September, 2020. In this manner, the

Appellant's Withdrawal Proposal was considered and deliberated

upon by the CoC at various CoC meetings and was also assessed

and examined for commercial feasibility and viability by the CoC

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 161 of 213 advisors. It is respectfully submitted that Dunn & Bradstreet in its

Techno Economic Viability study of the Appellant's Withdrawal

Proposal, after an in depth analysis of the economic viability of the

proposal of the Appellant inter alia concluded "Based on the above

assessment carried out and its impact on the envisaged cash flows

there may be a shortfall in the debt serviceability proposed under the

restructuring scheme".

XI. It is submitted that the Respondent No. 2, after considering the

Appellant's Withdrawal Proposal (including its commercial viability

basis the documents and clarifications provided by the Promoters

and the reports by the advisors of the CoC) rejected the Appellant's

Withdrawal Proposal by an overwhelming majority of 98.14% voting

share. It is respectfully submitted that except one financial creditor

(namely ABG Shipyard Limited, which itself is a company

undergoing liquidation currently), all the financial creditors who cast

their vote rejected the Appellant's Withdrawal Proposal (including

the dissenting financial creditors namely Bank of Maharashtra, IFCI

Limited and SIDBI who have filed separate appeals against the

Impugned Order). The Appellant is belatedly trying to challenge the

rejection of his Appellant's Withdrawal Proposal with an ulterior

motive only known to him.

XII. The Appellant has incorrectly, and in any case belatedly, sought to

challenge the rejection of its 12A proposal by the CoC of the

Consolidated Corporate Debtors vide the instant Appeal. It is

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 162 of 213 submitted that the Appellant in the instant Appeal has sought to

indirectly bring into life a dead issue inasmuch as the Appellant's

Withdrawal Proposal was rejected way back on 11.12.2020, while

the present Appeal is filed on 31.07.2021, i.e., after lapse of more

than 7 months. It is respectfully submitted that the background

circumstances under which the Appeal has been filed by the

Appellant cannot be lost sight of. The personal insolvency

proceedings were pending at the time of the Appeal and the challenge

before the Hon'ble Supreme Court had been dismissed. Therefore, it

was a matter of time before the personal insolvency proceedings were

initiated against the Appellant. Further, the government

investigating agencies are investigating the acts of commission and

omission by the Appellant in the affairs of the Consolidated

Corporate Debtors. It is a matter of record that the Union of India,

through Ministry of Corporate Affairs, has also initiated proceedings

against the Appellant and other directors, promoters and key

managerial personnel of the Consolidated Corporate Debtors under

Sections 241 and 242 of the Companies Act, 2013 and orders have

been passed by the Adjudicating Authority. Copy of the Order dated

August 31, 2021 passed by the Adjudicating Authority Mumbai in

the petition under Section 241-242 of the companies Act, 2013

granting interim reliefs. The Appellant who has failed to pay under

the guarantees given by him, despite demands having been made

against him, and has various cases of impropriety pending against

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 163 of 213 him and whose mismanagement can be attributed to have resulted

in the CIRP of the Consolidated Corporate Debtor cannot be trusted

with large claims of full repayment and maximisation of value of the

Consolidated Corporate Debtors.

XIII. The holding structure chart of the foreign oil & gas assets of the

Videocon group is as follows:

XIV. Initially, VIL and VOVL had availed of the financial assistance from

Lenders as "obligor/ co-obligor". However, subsequently, since the

Oil & Gas Assets were primarily held by the subsidiaries and VIL

only had interest by virtue of its shareholding, VIL had itself

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 164 of 213 requested to be released from its obligation as a co-obligor. The letter

dated 21 November 2016 has been signed by the Appellant himself.

In its request, one of the reasons cited by VIL was that it was not in

a good financial position and its precarious financial position may

not yield the best returns from the asset monetization of the Oil &

Gas Assets. In lieu, VIL executed corporate guarantee to secure the

financial assistance granted to VOVL and VHHL. A follow up letter

dated January 17, 2017 on the same lines was also written by VIL

to IDBI Bank Limited which further strengthens this understanding

of the parties. VOVL even responded to SBI Letter dated December

18, 2018 and requested SBI to initiate the process of assessing the

valuation of Oil & Gas Assets and undertake monetisation, and

VOVL is ready and willing to do necessary things in this regard.

Thereafter, Deed of Undertaking dated January 9, 2019 from VOVL,

VHHL, VEBL and VINI was also executed in SBI's favour in relation

to mutual decision taken to initiate process of valuation and

monetisation of certain Oil & Gas Assets.

XV. It is submitted that the 12.02.2020 Adjudicating Authority Order

came to be passed on the MA 2385 filed by the Appellant more than

a year after the initiation of the CIR Process against Consolidated

Corporate Debtors. Appellant mischievously filed the MA 2385

seeking inclusion of foreign oil and gas assets held by the foreign

incorporated subsidiaries of Videocon Group. The said application

was vehemently opposed by SBI for the CoC before the Adjudicating

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 165 of 213 Authority. However, despite the strong objections to the inclusion of

these assets, Adjudicating Authority vide Order dated 12.02.2020

directed the Resolution Professional of VIL to:

a. to consider and treat all assets, properties, rights, claims,

benefits of VOVL, VHHL, VEBL and VINI, which are all separate

and distinct legal entities and are direct and indirect subsidiaries

of VIL, as assets and properties of VIL for the purpose of CIR

Process; and

b. to include the assets, liabilities, claims of VOVL, VHHL, VEBL

and VINI in the Information Memorandum ("IM") of VIL, and

declared the moratorium imposed in relation to VIL under IBC to

be applicable to the foreign oil & gas assets ("Foreign Oil & Gas

Assets") and all the other rights and benefits held by or through

VOVL, VHHL, VEBL and VINI.

XVI. On 19.02.2020, this Hon'ble Tribunal having found merit in the SBI

appeal was pleased to stay the 12.02.2020 Adjudicating Authority

Order and noted that:

"We have seen Explanation (b) below Section 18 of

Insolvency and Bankruptcy Code, 2016 (IBC - in

short). The Impugned Order dated 12.02.2020 is

stayed till the next date."

XVII. The claims filed by the creditors of VOVL and VHHL in the CIR

Process of VIL are on account of corporate guarantees issued by VIL

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 166 of 213 and are separate and distinct from the claims of such creditors

against the principal borrowers namely VOVL and VHHL. The

consolidation order dated 8th August, 2019 passed by the

Adjudicating Authority did not deal with the foreign Oil & Gas

Assets. The Appellant is falsely contending that the order dated 8th

August 2019 passed by the Adjudicating Authority proposed the

consolidation of the foreign oil & gas assets. In fact, nowhere was

the contention raised either by the financial creditors or the

Appellant in the consolidation application for consolidation of the

foreign Oil & Gas Assets. The order dated 8 th August, 2019 only

considers the Ravva oil & gas field in which VIL directly holds a

participating interest as being pooled together in the assets and

liabilities for the purposes of consolidation.

"81. ........ The argument was that the

assets of each companies are validly

charged to secure the loans, and the

secured creditors will be protected even

if the companies go into liquidation,

however, the liquidation route may affect

the rights of the other stakeholders.

Thus, the consolidation route is going to

be more beneficial to all the stakeholders,

comparing the liquidation route. At this

juncture it is worth to devote few more

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 167 of 213 lines that group companies have been

created within the parameters of law as

a 'special purpose vehicle' hardly holding

independent valuable assets but

burdened with liability, Which may

cause disadvantage if segregated. But

after consolidation all the liabilities

pooled together can be satisfied up to

large extent against the value of common

pooled assets, which are otherwise in

control of a single entity. In this group

Licenses, Good-will, Permits, Trade-

marks etc. are valuable but scattered all

over the group entities. One more

valuable asset is 'Oil & Gas field'

acquired through joint venture and duly

taken as a valuable property by the

banks while granting loan. So all are to

be consolidate which shall create a high

value cumulative asset, going attract an

equally high value Resolution Plan.

Singly it is a far sight. Therefore apart

from all other reasons inter-alia, the

existence of Reeva oil-field in the common

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 168 of 213 pool of assets is a good reason for

propounding 'Consolidation'."

XVIII. It is also stated that the Appellant has no locus standi to espouse

issues purportedly at the behest of creditors of the Consolidated

Corporate Debtors. The proceedings initiated against the Appellant

and the personal guarantors are bona fide and in accordance with

applicable laws.

C. Submissions of the Respondent No.3/Successful Resolution Applicant (SRA):

I. It is submitted that in view of the financial indiscipline shown by

the appellant in repaying the debt owned by the CDs. SBI has

filed a petition der section 7 of the Code against the CD/VIL being

CP(IB) - 02 (MB)/2018 before the Adjudicating authority. It is an

admitted fact that the appellant did not oppose the committing of

default, consequently resulting the said petition being admitted

by the Adjudicating Authority vide order dated 06.06.2018 and

the CD/VIL entered CIRP. Further, it is also an admitted fact that

SBI has filed an application being CP(IB) 1197 /MB/2020 under

Section 95 of the Code against the Appellant (in his capacity as a

personal guarantor) and that such application was allowed by the

Adjudicating Authority vide order darted 01.09.2021. Thus, the

Appellant has singly handedly driven the CDs into CIRP.

Therefore, it is submitted that the present appeal smacks of

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 169 of 213 malafide and is liable to be dismissed at the threshold. In

response to this baseless allegation, at the outset, the R-3 would

like to place on record its financial proposal in the approved

resolution plan:

a. Upfront payment of INR 200 crore to Financial creditors;

b. Upfront payment of INR 52 Crore towards the entire admitted

workmen/employee dues.

c. Upfront payment of INR 10 Crore towards the admitted OCs.

Payment of INR 2700 crore to FCs in the form of NCD carrying

an annual interest coupon of 6.65%.

d. Equity holding at 8% in VIL to all FCs.

e. Cash reserves of VIL to accrue to the FCs.

II. Thereafter, the Adjudicating Authority passed approval order

thereby approving the Resolution Plan. Pertinently, at no stage

did the Appellant challenge the approval of the resolution plan

before the Adjudicating Authority.

III. It is also submitted that the Appellant no standing to argue that

the resolution plan is violative to Section 30(2) of the Code

because the Appellant is neither an OC nor a FC of the CDs.

Therefore, all the averments made by the Appellant in its appeal

regarding the Resolution plan being discriminatory inter se the

OCs and FCs is not tenable, baseless and liable to be rejected at

the threshold. In any event, the resolution plan has adequate

provisions adhering to the mandatory requirements of Section

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 170 of 213 30(2) and it is only upon examination of such provisions that the

adjudicating Authority has approved the Resolution plan. In this

regard it would not be out of place to mention that not even a

single OC has challenged the resolution plan. Hence, the present

appeal alleging that the resolution plan discriminates OCs is ex-

facie meritless.

IV. Similarly, in so far as the allegations of the Appellant regarding

the haricuts provided in the resolution plan to the OCs and the

FCs is concerned, it is submitted that:

a. The Appellant has no locus to make such averment;

b. The commercial wisdom of CoC in accepting a particular

haricut is not amenable to judicial review as settled by the

Hon'ble Supreme Corut in a catena of decisions, and;

c. The Appellant never raised its objection on haircut provided in

the Resolution plan before the Adjudicating Authority.

V. It is also submitted that the Appellant has never filed any

application before the Adjudicating Authority opposing the

approval of the Resolution plan of R-3 on the ground that the

consolidated CIRPs ought to have included the foreign oil and gas

assets. Hence, without prejudice to the below, it is submitted that

the plea of Appellant on inclusion of foreign oil and gas assets is

only an afterthought action and is liable to be rejected on this

ground only. It is submitted that pursuant to the order dated

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 171 of 213 06.06.2018 admitting the VIL into CIRP, the Adjudicating

Authority passed an order dated 08.08.2019 consolidating the

CIRP of the CDs (Comprising of 13 companies) ("Consolidation

order"). Pertinently, the following four entities and their assets

were not included by the Adjudicating Authority in consolidated

CIRPs:

a. VOVL Limited;

b. Videocon Hydrocarbon Holdings Limited;

c. Videocon Energy Brazil Limited, and;

d. Videocon Indonesia Nunakan Inc.

The above entities are collectively referred to as "four entities".

VI. The Adjudicating authority passed order dated 22.08.2019 in

that MA No. 2385of 2019 in CP 2 of 2018 directing the status quo

and prohibiting SBI from selling the foreign oil and gas assets

until final disposal of the MA. Thereafter, vide order dated

12.02.2020, the Adjudicating Authority disposed the MA with a

find that the foreign oil and gas assets held by the Four entities

cannot be treated separately and must be seen as the property of

VIL for the purpose of the consolidated CIRP. SBI challenged the

final order by filing CA(AT) (Ins) No. 299 of 2020 before this

Appellate Tribunal. The said CA was listed on 19.02.2020, on

which date this Appellate Tribunal was pleased to say the final

order and restored the interim order. In view of the above, the

consolidated CIRP proceeded without inclusion of the four

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 172 of 213 entities or their assets. After passing of the order dated

19.02.2020, the Appellant took no steps whatsoever to vacate the

stay on the final order. In fact, it is evident from the order dated

08.09.2020 passed in CA(AT) (Ins) No. 299 of 2020 stay was

passed by this Appellate Tribunal that the pleadings were not

completed. In the meanwhile, the consolidated CIRPs concluded

by way of approval of the Resolution plan of R-3 in terms of the

approval order. Most pertinently, while CA(AT) (Ins) No. 299 of

2020 was pending, the Appellant continued to participate in the

consolidated CIRPs and has also filed his proposal under Section

12A of the Code (which admittedly also does not include the four

entities or their assets - a fact that has been suppressed in the

present appeal). Hence, the Appellant by way of his conduct,

acquiesced to the consolidated CIRPs and is now estopped from

arguing that such consolidated CIRPs sought to have included

the foreign oil and gas assets of the four entities.

VII. It is also submitted that the Appellant is merely raising the

aforesaid issue to sabotage and derail the CIRP upon approval of

the resolution plan. Hence, the appellant's averment that foreign

assets of four entities ought to have been considered in the

consolidated CIRPs is plainly meritless and liable to be dismissed.

VIII. The Section 12A proposal of the Appellant was placed for voting

during the 19th meeting of the CoC 11.11.2020 along with the

Resolution plan of the Respondent No.3 and the one other

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 173 of 213 resolution plan filed by the V-shape investment management

limited. Upon consideration, the CoC has rejected the section 12A

proposal. Admittedly the above decision of CoC has not been

impugned by the Appellant before the adjudicating Authority, a

fact which has been suppressed in the present appeal. Hence, the

appellant has no standing and case of action to seek the prayer

for reconsideration of the 12A proposal by CoC when, in fact,

such prayer was never made before the Adjudicating Authority.

This apart, it is settled law that the decision of CoC to approve or

reject a Section 12A proposal is part of its commercial wisdom,

which is not amenable to judicial review. Hence, all the grounds

raised by the Appellant in the present appeal regarding non-

consideration of its Section 12A proposal are liable to be rejected.

C. Analysis of facts, law and reasons:

CA(AT) (Ins) No. 545 of 2021

19. This is a case of 'Trademark License Agreement' (TLA) dated

07.07.2005 executed between the Appellant i.e Electrolux Home

Products INC, Singapore and Electolux Kelvitor Limited which was

merged into the Corporate Debtor under the scheme of merger and

amalgamation. This case relates to the aforesaid agreement, the TLA

specified that the Appellant was entitled to terminate the TLA, if the CD

underwent any event that resulted in the Dhoot family no longer being

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 174 of 213 in control and the Appellants were entitled to terminate the TLA once

CD is admitted to CIRP as Dhoot family does not remain in control of

CD. The Petition seeking to admit the CD into CIRP, was filed on

01.01.2018 and CIRP was initiated from 11.06.2018 (page 55 of the

Appeal Paper book) in CA(AT) (Ins) No. 529 of 2021. There were

exchanged of letters between the Appellant and the RP on the validity

and lawfulness of the termination of the TLA. It is also observed that

the Appellant is pursuing with the CD from 05.06.2018 for termination

of the contract in terms of TLA continuously and filed MA No.527 of

2019 before the Adjudicating Authority on 05.02.2019 seeking inter alia

a declaration that the termination of the TLA was valid and direction

that RP be prohibited from using the trademark in any manner.

Moreover, it appears from elaborate submissions of both the parties

that CD has stopped the manufacturing of this product from 2018 itself.

However, the Adjudicating Authority in IA No. 527/2019 has

adjudged the agreement dispute in its impugned order and the

same is stated below vide para 11 appearing in appeal paper book in

CA(AT)(Ins) No.503 of 2021:

"11. As far as IA 527 2019, praying for use of Brand name

"Kelvinator" is concerned, we are of the considered view that the

Agreement should continue for at least a year from the date of

approval of the plan as per the existing Terms and Conditions as a

transitional arrangement and subsequently it is upto both the parties

to decide on the same as per their mutual understanding".

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 175 of 213

20. However, the Hon'ble Supreme Court in Civil Appeal No. 3045 of

2020 in Tata Consultancy Services Limited Vs. Vishal Ghisulal Jain,

Resolution Professional, SK Wheels Pvt. Ltd. has held vide para 27 that

NCLT does not have any residuary jurisdiction to entertain the

contractual dispute and the same is stated below:

"Para 27. - It is evident that the appellant had time and

again informed the Corporate Debtor that its services were

deficient, and it was falling foul of its contractual

obligations. There is nothing to indicate that the

termination of the Facilities Agreement was motivated by

the insolvency of the Corporate Debtor. The trajectory of

events makes it clear that the alleged breaches noted in

the termination notice dated 10 June 2019 were not a

smokescreen to terminate the agreement because of the

insolvency of the Corporate Debtor. Thus, we are of the

view that the NCLT does not have any residuary

jurisdiction to entertain the present contractual dispute

which has arisen dehors the insolvency of the Corporate

Debtor. In the absence of jurisdiction over the dispute, the

NCLT could not have imposed an ad-interim stay on the

termination notice. The NCLAT has incorrectly upheld the

interim order of the NCLT."

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 176 of 213 All this reflects that the Adjudicating Authority has made an error

of judgment by permitting Agreement during transitional

arrangement for a year or so & thereafter parties to decide as per

their mutual understanding. Hence, it is prudent to remand the

matter back to CoC for a review in accordance with the law.

Hence, this alone is the ground which requires setting aside of the

impugned order of the Adjudicating Authority.

CA(AT) (Ins) No. 650 of 2021

21. What is revealed from the submission of the Appellant that all

assets owned by Videocon group, particularly, foreign oil and gas assets

are not included in the information memorandum as also no valuation

thereof has been considered while the claim of lenders of foreign oil and

gas assets of Rs.23,120.90 Crore being considered as claims without

considering the corresponding assets- foreign oil and gas assets for

which the borrowings were used. This has resulted into lower valuation

and the secured creditors are getting less than 5% of their claimed

amount and there is a haircut of 95.85% to all its creditors as per para

5 of the impugned order. The RP should have included these foreign oil

and gas assets appropriately. He has also stated that the RP and their

appointed agency were concerned only with drawing their remuneration

to the extent of Rs.1.5Crore per month without discharging their duties.

The RP has summarily rejected his stand and has cited explanation - b

to Section 18 of the Code specifically which excludes the assets of any

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 177 of 213 Indian and foreign subsidiary of the CD from the purview of the terms

Assets as mentioned in the section 18 of the Code.

22. The SRA through its ld. SR. counsel has unambiguously

submitted that the Appellant has not opposed the committing of default

when the application was filed by the Bank for initiation of CIRP. The

Appellant has no locus standi to file the appeal at this stage and

challenge the haircut. The Hon'ble Apex has repeatedly viewed that the

commercial wisdom of the CoC is not amenable to judicial review. He

has no authority to challenge the haircut.

23. However, the CoCs has categorically stated that Videocon

Industries limited (VIL) and Videocon telecommunication ltd (VTL) were

two largest accounts that were classified as NPA by banks on account

of defaults and in respect of whom RBI had provided specific

instructions as per Banking Regulations Act, 1949 for initiating

insolvency proceedings. The RBI has sent a letter to SBI in its capacity

as lead bank to resolve their debts outside the scheme of the Code till

December, 13,2017 failing with insolvency proceedings under the Code

are to be initiated against the companies before 31.12.2017. As a result

of non-resolving the continuing default, the CIRP petition was filed on

01.01.2018 against VIL and VTL ; they are blaming the poor

management of the appellant leading to such situation who is

obstructing to frustrate and derail the CIRP and thwart all attempts of

a Successful Resolution of a consolidated CD. It has also been stated

by the CoCs that it is a matter of record the applicants act of

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 178 of 213 commission and omission while in control of the consolidated CDs are

being investigated by several investigating agencies and the proposal

under Section 12A of the Code was already rejected by the CoCs. The

Appellants are challenging the impugned order just for reviving its

Section 12A (of IBC) proposal. It has also been stated by them that it is

the commercial wisdom of the CoCs to manage the CIRP the way they

think fit and proper. The Appellant's Section 12A proposal was rejected

by CoCs by a majority of 98.14% voting share. The Ld. Sr. Counsel

further stated that their existed no legal or statutory requirements to

trade the foreign oil and gas assets as part of the Consolidated CIRP

process. However, in 'finance and accounts' there is a matching concept

of liability and its corresponding assets wherever liability is considered,

the corresponding assets is suppose to exist in the form of the assets or

the liability / borrowings which have been used to finance the losses.

In any case, commercial wisdom of CoC is non-justifiable as already

laid down by multiple judgments of Hon'ble Supreme Court. Hence, this

appeal deserves to be dismissed and is dismissed.

CA(AT) (Ins) No. 503 of 2021 With CA(AT) (Ins) No. 505 of 2021 With CA(AT) (Ins) No. 529 of 2021

24. There are several issues as enunciated in the submissions that

whether CoCs got correct fact and other related inputs to apply

commercial wisdom? The related issue is that commercial decisions are

based on the input which it gets from the professionals. In other words,

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 179 of 213 it is based on GIGO (Garbage in Garbage out) system. It has also been

brought to the notice of the Bench that the concerns raised by

Dissenting Financial Creditors in CA(AT) (Ins) No. 503, 505 & 529 of

2021 regarding nondisclosure of their respective share of the liquidation

value may have resulted in them not being able to take a proper and

prudent decision on the resolution plan. In addition, had they been

known , the correct share of the liquidation value, they should have

persuaded the Assenting Financial Creditors not to accept the

resolution plan with such huge haircut which is in the nature of

unprecedented haircut resulting in loss to the banks/financial

institutions handling public money. What has revealed from the 3

banks/ financial institutions that the resolution plan provide the

amounts to the appellant banks is less than the liquidation value which

the bank will receive otherwise and therefore, contrary to Section 30 of

the Code. Some discrepancies exist between Form-H and distribution

excel sheet shared by SBI Caps. As it looks to us that nobody has

disputed this aspect of difference in figure except that the RP has stated

that these are estimated amount to be paid to the DFC as per Code and

the CIRP Regulations. The RP has washed off his hands that he is not

responsible for the figure provided by SBI Caps, while he himself has

given estimated figure and has undertaken to provide correct figure at

a later date. This does not seem to be appealing.

25. It is also revealed that the amounts to be paid to the banks will

be determined at the time of payout in itself, is misconceived. Simply

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 180 of 213 stating everywhere that it shall not be less than the amount to be paid

to such creditors in accordance with Section 53 of the Code in the event

of liquidation is just washing off his hands. It is also a fact that the

direction by the Adjudicating Authority to the SRA to pay the DFC by

cash instead of NCD amounts to modification of the Resolution Plan.

This is a domain of the CoC & not Adjudicating Authority. Resolution

Plan does not provide for 'upfront' payment in priority to the DFC as

provided in Section 30 of the Code R/w IBBI ( INSOLVENCY

RESOLUTION PROCESS FOR CORPORATE PERSONS ) Regulations 38.

Para 3.5 of the resolution plan proposes that NCD will be issued to the

DFC redeemable after a significant period of time around five years

which does not qualify as 'payment' in terms of Section 30 (2)(b) of the

Code. Perception of breach of confidentiality in relation to liquidation

value is not ruled out.

26. All of them have suggested either for setting aside the impugned

order or remitting back the resolution plan for reconsideration and

compliances by CoC.

27. While the RP has submitted that in any case the Adjudicating

Authority has already directed upfront payment in cash to DFCs so why

should the plan send back to the CoC. He has also stated that SBICaps

was the process advisor appointed by the CoC and hence, RP is not

responsible. The distribution mechanism is set to have been done

assuming that all Financial creditor will vote in favour of the Resolution

plan.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 181 of 213

28. The SRA has not disputed the haircut of over 95% to the creditors

but has submitted that the Financial Creditors dissenting the

resolution plan are constituting less than 5% voting share in the CoC

and has thus no value to derail the CIRP. It has also stated that Form-

H filed by the RP mentioned that the DFC will get Rs.105.23 Crore

whereas as per SBICAPs details the DFCs were entitled to Rs.114.21

Crore. It has stated that the SBI Caps is not the registered valuer

appointed under the Code, hence, their figures cannot be relied upon.

They have also stated that the modification of the resolution plan is not

changing the commercials of the plan and has also stated that the

commercial wisdom of CoC is non-justifiable as per the law establish

now.

29. what the SRA believes that haircut has no relevance , only

relevance is liquidation value and resolution plan value.

30. While the AFCs constituting 94.98% of the CoCs of consolidated

Videocon group of companies (Consolidated CDs), out of 95.09% who

voted in favour of the Resolution plan, has mentioned several reasons

to remand the matter back to the CoC for its reconsideration and even

gone ahead to state that the CoC and the RP to conduct a fresh process

of inviting fresh expression of interest and resolution plan from all

interested Resolution Applicants etc., to safeguard the interest of all

stakeholders and the public money. It has accepted the fact that the

significant observations regarding the low value of the resolution plan

and the haircut of such a high magnitude being suffered by various

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 182 of 213 classes of stakeholders including the MSME, backbone of the Indian

economy and other operational creditors under the Resolution plan

requires to be reviewed by the CoC. It has also been stated in an

unambiguous terms that they wish to give due consideration of

observations in the impugned order and the stay order passed by this

Tribunal on 19.07.2021. The CoC, majority of which are public sector

banks and financial institutions dealing with public money is acting as

the custodian of public trust and discharging statutory role. The CoC

is vested with a duty of trust and care. The CoC power is not without

responsibility and even Hon'ble Apex Court has made the CoCs decision

on commercial matters as non-justiciable. Keeping in view these factors

in mind, the public sector banks and financial institutions etc.,

constituting approx.95% of the CoC (out of 95.09% voted in favour) have

resolved to request this Tribunal to remand the matter back to the CoC

for its reconsideration through an affidavit. We agree that the CoC, if it

has power to approve the plan, has also power to reconsider and review

its own decisions on Resolution Plan. Power to approve, no doubt,

carries with it power to reconsider. As stated supra, the 'Board of

Directors' of the Companies who approves the proposal also at a later

date review and even annulles the approvals in the course of the

implementations, if observed and pointed out by the implementers ,the

difficulty and its economic or otherwise impact. What to say of the

'Board of Directors' in corporate management even the shareholders

sometimes review its own approvals ,based on Board Of Directors

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 183 of 213 recommendations and if required , passes by appropriate majority

under the relevant Act, the same approval is revoked.

31. Generally, in the Executive Management has a different

perception as it is being seen in the Executive Management. It is the

prevalent practice that in service law, whoever is the Appointing

Authority can normally also be Disciplinary Authority unless delegated

to a lower level by the same Appointing Authority. Appointment

committee of the cabinet, if, approves a particular appointment then

resignation is also accepted normally by the same authority or to a

delegated authority and that delegation is also given by the same

Appointment Committee of the Cabinet.

32. The same 'Board of Directors' of the Company registered under

the Companies Act, 1956/2013 approves a particular proposal based

on input available at that point of time but reverses its decision/

approval at a subsequent board meeting may be due to getting

additional input to the proposal which were not available at that point

of time, or it may be due to certain changes in the economic policy of

the government or due to certain changes in the market environment

in which the industry/ organization operates.

33. Be that as it may, at a later stage when projects approvals go to

implementing authority then if observed certain practical problems

which has not been perceived by the Board of Director at that point of

time also involves a reversal of the approval of the original board

resolution. As we all understand that Board of Directors are the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 184 of 213 management of the Company and are the key managerial personnel for

the management of the Company.

34. There are instances when a particular proposal is disapproved

initially by the Board of Directors of the Company, may be placed again

before the Board and because of new material contained it may be

reconsidered and approved by the Board. So it cannot be held that

Board of Directors are not empowered to review their proposals whether

approved or disapproved at a particular point of time. Shareholders are

the owners of the Company and generally they are the appointing

authority of the Director either in the Annual general meeting of the

Company or in the Extra ordinary general meeting of the Company.

Based on Board approved resolution as per the requirement of the

Companies Act, whether it is of Companies Act, 1956 or Companies Act,

2013. Certain resolutions require approval of the shareholders as per

provisions of the Companies Act. These shareholders based on the

wisdom approves a particular proposal or disapproves a particular

proposal at a particular point of time. They also can change their

approval based on input provided at a later stage by a majority votes or

otherwise or may be if it is proposed by requisite majority as per

provisions of the Companies Act by convening Extraordinary General

Meeting or placing it before the Annual General Meeting.

35. We all talk of going concern concepts under the Code and this

concept is meant for giving a life to the company under a resolution.

With the initiation of CIRP, the management changes instead of Board

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 185 of 213 of Directors, it is the CoC who takes over the management of the

Company. The role of RP has already been prescribed under the Code

and the Regulations and for specific actions where the approval of the

management is required, he has to go to the CoC alongwith these

proposals for approval. It is the CoC who has got the final decision

making authority. The Hon'ble Apex Court has already held in CoC of

Essar Steel (supra) that the commercial wisdom of the CoC cannot be

adjudicated by the Adjudicating Authority. As far as commercial

decisions are concerned, they are the supreme authority, they have the

full power to decide one way or other any resolution based on input

provided to them or otherwise. It is a settled law that commercial

wisdom is non-justifiable and that's why the commercial decisions are

beyond the purview of the judicial wisdom in case falling under the

Code. Needless to mention that the CoCs is to decide the fate of the

Corporate Debtor as they are the one who are going to bear the loss of

insolvency and who has sufficient expertise in dealing with revival and

rehabilitation of the Corporate Debtor.

36. It is a settled law that under the Code commercial wisdom is

separated from judicial wisdom and certain acts of CoC are non-

justiciable. The Adjudicating Authority does not have power to modify

and change the plan as held by Hon'ble Apex Court in the case of K.

Shasidhar (supra) and CoC of Essar Steel (supra).

37. What is being perceived repeatedly by the Apex Court that

commercial wisdom are totally in the domain of CoC and these business

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 186 of 213 decisions taken by CoCs are non-justiciable by the Adjudicating

Authority or this Tribunal. The Code under Section 31 (1) r/w Section

30 (2) has clearly and specifically provided that the Adjudicating

Authority is to see that the resolution plan as approved by the CoC

meets the requirements as referred to in sub-Section 2 of Section 30 of

the Code and if the Adjudicating Authority is satisfied that the laid down

criteria are complied with in the resolution plan then they can approve

the plan. So, the Adjudicating Authority was supposed to see whether

the DFCs have been paid not less than the amount to be paid to such

creditors in accordance with Section 53(1) in the event of a liquidation

of the CD. He was not supposed to suggest any modification on the plan

which it has been done in the impugned order dated 08.06.2021 in para

24, 5 & 6. These suggestions are falling in the domain of CoCs and the

Adjudicating Authority should have considered to send back for re-

consideration to the CoC. For brevity and clarity Section 30 & 31 of the

Code is reproduced below for ready reference:

Section 30: Submission of resolution plan.

(1) A resolution applicant may submit a

resolution plan 1 [along with an affidavit

stating that he is eligible1A under section 29A]

to the resolution professional prepared on the

basis of the information memorandum.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 187 of 213 (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 amount that would have been paid to

such creditors, if the amount to be distributed

under the resolution plan had been distributed

in accordance with the order of priority in sub-

section (1) of section 53,

whichever is higher, and provides for the

payment of debts of financial creditors, who do

not vote in favour of the resolution plan, in such

manner as may be specified by the Board,

which shall not be less than the amount to be

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 188 of 213 paid to such creditors in accordance with sub-

section (1) of section 53 in the event of a

liquidation of the corporate debtor. Explanation

1. -- For removal of doubts, it is hereby clarified

that a distribution in accordance with the

provisions of this clause shall be fair and

equitable to such creditors. Explanation -- For

the purpose of this clause, it is hereby declared

that on and from the date of commencement of

the Insolvency and Bankruptcy Code

(Amendment) Act, 2019, the provisions of this

clause shall also apply to the corporate

insolvency resolution process of a corporate

debtor-

(i) where a resolution plan has not been

approved or rejected by the Adjudicating

Authority;

(ii) where an appeal has been preferred under

section 61 or section 62 or such an appeal is

not time barred under any provision of law for

the time being in force; or

(iii) where a legal proceeding has been initiated

in any court against the decision of the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 189 of 213 Adjudicating Authority in respect of a resolution

plan;]

of the Corporate debtor after approval of the

resolution plan;

(d) the implementation and supervision of the

resolution plan;

(e) does not contravene any of the provisions of

the law for the time being in force;

(f) conforms to such other requirements as may

be specified by the Board.

[Explanation. -- For the purposes of clause (e),

if any approval of shareholders is required

under the Companies Act, 2013 (18 of 2013) or

any other law for the time being in force for the

implementation of actions under the resolution

plan, such approval shall be deemed to have

been given and it shall not be a contravention

of that Act or law.]

(3) The resolution professional shall present to

the committee of creditors for its approval such

resolution plans which confirm the conditions

referred to in sub-section (2).

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 190 of 213 (4) The committee of creditors may approve a

resolution plan by a vote of not less than 56

[sixty-six] per cent. of voting share of the

financial creditors, after considering its

feasibility and viability, [the manner 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 that the committee of creditors shall

not approve a resolution plan, submitted before

the commencement of the Insolvency and

Bankruptcy Code (Amendment) Ordinance,

2017, where the resolution applicant is

ineligible under section 29A and may require

the resolution professional to invite a fresh

resolution plan where no other resolution plan

is available with it:

Provided further that where the resolution

applicant referred to in the first proviso is

ineligible under clause (c) of section 29A, the

resolution applicant shall be allowed by the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 191 of 213 committee of creditors such period, not

exceeding thirty days, to make payment of

overdue amounts in accordance with the

proviso to clause (c) of section 29A: Provided

also that nothing in the second proviso shall be

construed as extension of period for the

purposes of the proviso to sub-section (3) of

section 12, and the corporate insolvency

resolution process shall be completed within

the period specified in that sub-section.]

[Provided also that the eligibility criteria in

section 29A as amended by the Insolvency and

Bankruptcy Code (Amendment) Ordinance,

2018 shall apply to the resolution applicant

who has not submitted resolution plan as on

the date of commencement of the Insolvency

and Bankruptcy Code (Amendment) Ordinance,

2018.]

(5) The resolution applicant may attend the

meeting of the committee of creditors in which

the resolution plan of the applicant is

considered:

Provided that the resolution applicant shall not

have a right to vote at the meeting of the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 192 of 213 committee of creditors unless such resolution

applicant is also a financial creditor.

(6) The resolution professional shall submit the

resolution plan as approved by the committee

of creditors to the Adjudicating Authority.

Section 31: Approval of resolution plan.

31. (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 to

whom statutory dues are owed,] guarantors

and other stakeholders involved in the

resolution plan.

[Provided that the Adjudicating Authority shall,

before passing an order for approval of

resolution plan under this subsection, satisfy

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 193 of 213 that the resolution plan has provisions for its

effective implementation.]

(2) Where the Adjudicating Authority is

satisfied that the resolution plan does not

confirm to the requirements referred to in sub-

section (1), it may, by an order, reject the

resolution plan.

(3) After the order of approval under sub-section

(1),--

(a) the moratorium order passed by the

Adjudicating Authority under section 14 shall

cease to have effect; and

(b) the resolution professional shall forward all

records relating to the conduct of the corporate

insolvency resolution process and the

resolution plan to the Board to be recorded on

its database.

(4) The resolution applicant shall, pursuant to

the resolution plan approved under sub-section

(1), obtain the necessary approval required

under any law for the time being in force within

a period of one year from the date of approval

of the resolution plan by the Adjudicating

Authority under sub-section (1) or within such

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 194 of 213 period as provided for in such law, whichever

is later.

Provided that where the resolution plan

contains a provision for combination, as

referred to in section 5 of the Competition Act,

2002, the resolution applicant shall obtain the

approval of the Competition Commission of

India under that Act prior to the approval of

such resolution plan by the committee of

creditors."

38. The CoCs are the best judge to analyze, pick up and take prudent

commercial decision for the business but they are also subjected to test

of prudence in order to ensure fairness and transparency.

39. The level of haircut being unprecedented and involving large

public interest involving thousands of crore of public money requires

perhaps deep thinking and cool calculation by the CoC and as a result

of which perhaps, they have taken cognizance of certain judicial wisdom

in a true spirit and accordingly wishes to review their own decision. In

any case, when they are reviewing their own decisions the same has to

go through the deliberation, public grudge, loss of public money and

perhaps revaluation.

40. The magic concepts of accounting that for every liability there

may be some assets because Balance Sheet is nothing but reflects the

financial health of the company and in an ordinary language they can

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 195 of 213 say, it is a Sources & Application of Funds as on a particular date. It

has been pointed out that they have considered huge liability on

account of oil and gas assets at a foreign land but without considering

their investment value in the form of Shares existing the Balance Sheet.

41. In the judicial forum once an order is passed by a particular

authority for, an example, by the Adjudicating Authority, it cannot

review its order or judgment except as permitted under Section 420(2)

of the companies Act, 2013 r/w Rule 154 of the NCLT, Rules 2016. The

same judicial authority can only rectify any mistake apparent from

record either its own motion or brought to its notice by the parties. So

the power of review under judicial arena lies with the higher judiciary.

While in case of commercial decision of the 'Board of Director', the same

approving authority can review its own decision within the frame work

or boundary of the law laid down.

42. The Adjudicating Authority failed to consider the contentions of

the Appellants as a result of which the impugned order is ex facie illegal,

bad in law and contrary to the settled provisions of the Code and the

Regulations framed thereunder. The Adjudicating Authority having a

pivotal role in the scheme of Code. Whether the Adjudicating Authority

has approved the resolution plan mechanically and failed to exercise its

jurisdiction under Section 31 of the Code? The Resolution Plan has

provided a haircut of almost 95%, i.e. a meagre amount of Rs.2,900

Crore for an admitted liability of Rs.65,000 Crore against amount

claimed as per para 51 of the Appeal Paper Book / Form - H Rs. 71,433

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 196 of 213 Crore. The said waiver is over Rs.62,000 Crore, even the claim of the

financial creditors have been settled merely 5%. The Adjudicating

Authority has no doubt raised a question whether there has been a leak

of liquidation value in the resolution process. Concerns raised by the

lenders regarding distribution mechanism provided to the Dissenting

Financial Creditors in the resolution plan and the contentious issue of

distribution amount. All these are not complied with in accordance with

Section 31(1) which is a requirement for satisfaction of Adjudicating

Authority. Section 30(2) of the Code has also not been complied with.

The said plan provides for payment to the Dissenting Financial

Creditors by way of NCD and Equities which is impermissible as per the

Code. Paras 3.5.4, & 3.5.2 of the Resolution Plan (at page 237 -239 of

the Appeal paper book) are not in accordance with the directions given

by the Hon'ble Supreme Court in the case of Jaypee Kensington

Boulevard Apartment Welfare Association and Ors. Vs. NBCC (India)

Ltd. Ors., (Civil Appeal No. 339 of 2020 decided on 24.03.2021)

which are as follows:

"124. To sum up, in our view, for a proper and meaningful implementation of the approved resolution plan, the payment as envisaged by the second part of clause (b) of sub-section (2) of Section 30 could only be payment in terms of money and the financial creditor who chooses to quit the corporate debtor by not putting his voting share in favour of the approval of the proposed plan of resolution (i.e., by dissenting), cannot be forced to yet remain attached to the corporate debtor by way of provisions in the nature of equities or securities. In the true operation of the provision contained in the second part of sub-clause(ii) of Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 197 of 213 clause (b) of sub-section (2) of Section 30 (read with Section 53), in our view, the expression "payment" only refers to the payment of money and not anything of its equivalent in the nature of barter; and a provision in that regard is required to be made in the resolution plan whether in terms of direct money or in terms of money recovery with enforcement of security interest, of course, in accordance with the other provisions concerning the order of priority as also fair and equitable distribution."

43. The impugned order of the Adjudicating Authority dated

08.06.2021 as stated below:

"OBSERVATIONS OF THE ADJUDICATING AUTHORITY

1. As per the CoC approved Resolution Plan,

Assenting Secured Financial Creditors would

get only 4.89%, Dissenting Secured Financial

Creditors would get only 4.56%, Assenting

Unsecured Financial Creditors would get

only very meagre amount of 0.62%,

Dissenting Unsecured Financial Creditors

would get "NIL/ ZERO" amount and

Operational Creditors would also get a very

meagre amount of only 0.72%. Out of total

claim amount of Rupees 71,433.75 Crore,

claims admitted are for Rs 64,838.63 Cores

and the plan is approved for an amount of

only Rs 2962.02 Crore which is only 4.15% of

the total outstanding claim amount and the Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 198 of 213 total hair cut to all the creditors is 95.85%.

Therefore, the Successful Resolution

Applicant is paying almost nothing and

99.28% hair cut is provided for Operational

Creditors (Hair cut or Tonsure, Total Shave).

During the Course of hearing it is also

submitted that voluminous number of

Operational Creditors are also MSME and if

they are paid only 0.72 % of their admitted

claim amount, in the near future many of

these Operational Creditors may have to face

Insolvency Proceedings which may be

inevitable, therefore this Adjudicating

Authority suggests, requests both CoC and

the Successful Resolution Applicant to

increase the pay-out amount to these

Operational Creditors especially MSMEs as

this is the First Group Consolidation

Resolution Plan of 13 companies having large

number of MSMEs.

2. Further it is also observed that by just paying

only Rs. 262 Cores (8.84% of total plan value)

(Cash balance available with the Corporate

Debtors is approx.. Rs. 200 Crore) the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 199 of 213 Successful Resolution Applicant will get

possession of all the 13 Corporate Debtors to

run these units and the first payment of Rs.

200 Crore as part redemption amount of

NCDs will be paid within 25 months from the

closing date and the balance amount of

Rs.6,25,00,00,000/ each is spread over in 4

instalments starting from 3rd year onwards

up to sixth year from the closing date and the

interest rate for the NCDs is also a nominal of

only 6.65% P.A payable annually. It may also

be noted that at the time of granting loan,

restructuring, approving the resolution plan

with such a huge hair cut also the financial

institutions, Committee of Creditors

consisting 35 members exercised their

Commercial Wisdom. Since this is the

Commercial Wisdom of the COC and as per

the various judgements of the Hon'ble

Supreme Court and by following the judicial

precedents, discipline the Adjudicating

Authority approves the resolution plan of the

Successful Resolution Applicant with a

suggestion, request to both CoC and the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 200 of 213 Successful Resolution Applicant to increase

the pay-out amount to these Operational

Creditors especially MSMEs.

9. The registered valuers have valued the

assets of the 13 companies situated

throughout the country and the 13 companies

have varied business interests, products,

segments viz oil and gas assets, Consumer

Electronics and Home Appliances such as

manufacturing Air Conditioners, Refrigerators,

LED/ LCD TVs, Washing Machines, Air

Coolers, providing Telecom Services, digital

solutions, Real Estate, Electronic Retail Chain,

Owner of Two Premium Brands etc.

Surprisingly the Resolution Applicant also

valued all the assets and liabilities of all the 13

companies and arrived at almost the same

value of the registered valuers. As per the CIRP

Regulations the Liquidation Value and Fair

Market Value is kept as confidential and

informed to the COC members only at the time

of finalising the resolution plan and even in the

present case the resolution bids are opened in

the 15th CoC meeting held on 02.09.2020

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 201 of 213 wherein Liquidation Value and Fair Market

Value was informed to the members of CoC.

Therefore, even if the confidentiality clause is

in existence, in view of the facts and

circumstances as discussed above a doubt

arises upon the confidentiality clause being in

real time use therefore, we request IBBI to

examine this issue in depth so as to ensure the

confidentiality clause is followed

unscruplessley, without any compromise in

letter and spirit by all the concerned parties,

entities connected in the CIRP. If not IBBI can

frame appropriate regulations, safeguards

there by the maximisation of value of the

assets of the Corporate Debtor(s) would further

increase which in turn will benefit all the

stakeholders. Since IBC is a nascent code we

feel "this type of input may be useful to the IBBI

as well as to the Government to frame

appropriate Regulations, Rules, etc.

10. It is also observed as a sample from the 10,

11, 12 CoC minutes, Members of CoC attended

is 26, 26 & 28 respectively whereas the

Applicant as Chair and the Applicant's

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 202 of 213 Authorised Representative from Deloitte

Touche Tohmastsu India LLP were 22, 20 & 20

representatives respectively in addition to the

Applicant's Legal Counsel. Such a large

number of Authorised Representative for the

Applicant indicates either he is not fully

prepared or monitory benefit (fees) to these

Representatives. Therefore, we request IBBI to

examine this issue as well and appropriate

guidelines may be issued.

24. In the light of above stated discussions and

the law has been settled, we find that the

proposed Resolution Plan meets the

requirements of Section 30(2) of the Code and

Regulations 37, 38, 38(1A) and 39 (4) of the

Regulations. The Resolution Plan is not found

in contravention of any of the provisions of

Section 29A of the Code and is in accordance

with Law. Hence the same deserves approval

with following observation and direction to the

CoC to make payments as per liquidation value

to all the dissenting Financial Creditors in cash

upfront before any payment is made to

assenting Financial Creditors as per the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 203 of 213 judgment of the Hon'ble Supreme Court in the

matter of Jaypee Kensington Boulevard

Apartments Welfare Association & Ors. Vs

NBCC (India) Ltd. & Ors. matter.

The above para of the impugned order reflects that the Adjudicating

Authority has made certain observations and require reconsideration by the

CoC so the resolution plan should have gone for a review to the CoC as it fails

to meet the criteria of Section 30(2)(b) r/w Section 31 of the Code.

44. The Hon'ble Supreme Court in Sakri Vasu s. State of UP & Ors.

(2008) 2 SCC 409, case compilation Vol.I, Page 10-18, para 18, 21 @

pg. 15) has even affirmed this understanding and held as under:

"It is well-settled that when a power is given to an authority

to do something it includes such incidental or implied

powers which would ensure the proper doing of that thing.

In other words, when any power is expressly granted by the

statute, there is impliedly included in the grant, even

without special mention, every power and every control the

denial of which would render the grant itself ineffective.

Thus where an Act confers jurisdiction it impliedly also

grants the power of doing all such acts or employ such

means as are essentially necessary to its execution.

21.An express grant of statutory powers carries with it by

necessary implication the authority to use all reasonable

means to make such grant effective."

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 204 of 213 It is well settled principle that an authority who has the power to take a decision, has equally the power to review the said decision. (see Dhikpathy Vs. Chairman Chennai Port Trust, 2001 SCC OnLine Mad 154 (case compilation, VI, Page 19-28, para 19@ page.26-27). Similarly, the Hon'ble Allahabad High Court in Duli Chand Vs. State of Uttar Pradesh and Ors., Writ C- No. 45851 of 2011 (case Compilation, V-I, page 29-30, relevant para @pg.30) has held that "it is a trite law that power to do also includes the power to undo". Similar, the Hon'ble Bombay High Court in Rajesh Hansraj Chopra Vs. the Competent Authority & Ors., 2001 SCC Online Bom 1145, (Case Compilation, V.I Page 68-72, 13@ pg. 71-72) had held that "Section 21 of the General Clauses Act is a general provision how to interpret provisions of an enactment regulation or rules where certain powers are conferred on certain authority to issue an order and the extent to which such power could be exercised. In doing so, such authority is conferred with power to modify, amend or to alter it". Relying on the same principle of S.21, Hon'ble Bombay

High Court in Sunil Gayaprasad Mishra Vs. Rashtra Sant,

2012 (5) AllMR 581 (case compilation, Vol-I, page 73-97,

para 61-62 @pg. 93-94) (SLP dismissed by Supreme

Court), wherein the approval once granted to the

recommendations of the selection committee to appoint a

teacher, was considered to be capable of being reviewed

and even withdrawn. Relevant portion of the judgment is

quoted below:

"61. By the very nature of the power that is conferred in

these authorities, it is apparent that it coupled with a duty

i.e. to maintain discipline and order of highest nature in the

academic field. If that is the obligation to the society as a

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 205 of 213 whole that these authorities have to discharge, then, to hold

that they will be powerless or that they do not possess any

implied or incidental power to withdraw or cancel the

approval, would make the M.U.Act unworkable and its

provisions meaningless. In several cases of this nature, the

Hon'ble Supreme Cot has applied doctrine and principle of

implied power. That principle is founded on the premises

that conferment of a statutory power would necessarily take

within its import he authority to use all means to make

effective and meaningful.(...)"

45. All these reflect that power to reconsider any decision is within

the domain of CoC and even Hon'ble Apex Court in Catena of judgment

held that the commercial wisdom of the CoCs is non justifiable and

hence, it is in the domain of CoC, particularly, if at a later stage, it

finds in public interest and the amount of loss which the public

exchequer is to bear with such unprecedented haircut in such a large

fund employment, it is in the fitness of thing that the proposal can be

remanded back to the CoC, particularly, in view of their own affidavit

to review their decision. The CoC is not functus -officio on the

approval of the Resolution plan and accordingly, the judicial

precedents clearly established that the Adjudicating Authority and

this Tribunal is competent to send back the Resolution plan to the

CoC for reconsideration.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 206 of 213 To supplement this the following judicial precedents are cited

below:

"The Hon'ble Supreme Court in the case of Jaypee Kensingon

Boulevard Apartments Welfare Association and Ors. Vs. NBCC

(India) Limited and Ors., 2021 SCC OnLine SC 253 has held that in

case a resolution plan requires modification, the Adjudicating

Authority (which would include this Tribunal by virtue of the scheme

of the Code) must send back the resolution plan to the CoC to

consider the modifications, so as to afford an opportunity to

resolution applicant to modify the plan, and CoC may then re-

consider the plan and vote upon the same.

"127. The submissions made on behalf of the IRP in

this regard are correct that if the Adjudicating

Authority was of the view that the plan did not meet

with any particular requirement it could have only

sent it back to CoC to consider the proposed

modifications, so as to afford an opportunity to the

resolution applicant to modify the plan and to the

CoC to reconsider and vote upon the same".

...129. The upshot of the discussion foregoing is that

though the Adjudicating Authority has not erred in

disapproving the treatment of dissenting financial

creditor like ICICI Bank in the resolution plan but,

has erred in modifying the terms of the resolution

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 207 of 213 plan and in not sending the matter back to the

Committee of Creditors for reconsideration while

extending an opportunity to the resolution applicant

to make the necessary modifications."

Similarly understanding reflects even from the

Hon'ble Supreme Court decision in Committee of

Creditors of Essar Steel India Ltd, Through

authorized signatory Vs. Satish Kumar Gupta &

Ors. (2020) 8 SCC 53 wherein it had referred and

affirmed this power to remand back as under:

"....Thus, while the Adjudicating Authority cannot

interfere on merits with the commercial decision

taken by the Committee of Creditors, the limited

judicial review available is to see that the Committee

of Creditors has taken into account the fact that the

corporate debtor needs to keep going as a going

concern during the insolvency resolution process;

that it needs to maximise the value of its assets; and

that the interests of all stakeholders including

operational creditors has been taken care of. If the

Adjudicating Authority finds, on a given set of facts,

that the aforesaid parameters have not been kept in

view, it may send a resolution plan back to the

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 208 of 213 Committee of Creditors to re-submit such plan after

satisfying the aforesaid parameters. The reasons

given by the Committee of Creditors while approving

a resolution plan may thus be looked at by the

Adjudicating Authority only from this point of view,

and once it is satisfied that the Committee of

Creditors has paid attention to these key features, it

must then pass the resolution plan, other things

being equal."

46. Hence, we are of the considered view that the resolution plan is

not complying with Section 30(2)(b) of the Code r/w Section 31 of the

Code. Hence, it can be remanded back to the CoC.

47. Incidentally, we have also observed that Section 31(4) of the

Code states as follows:

"Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors."

48. Section 5 of the Competition Act, 2002 states as follows:

"Section 5 in the Competition Act, 2002

5. Combination.--The acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises, if--

(a) any acquisition where--

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 209 of 213

(i) the parties to the acquisition, being the acquirer and the enterprise, whose control, shares, voting rights or assets have been acquired or are being acquired jointly have,-- (A) either, in India, the assets of the value of more than rupees one thousand crore or turnover more than rupees three thousand crore; or (B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars or turnover of more than fifteen hundred million US dollars; or

(ii) the group, to which the enterprise whose control, shares, assets or voting rights have been acquired or are being acquired, would belong after the acquisition, jointly have or would jointly have,--

(A) either in India, the assets of the value of more than rupees four thousand crore or turnover of more than rupees twelve thousand crore; or (B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars or turnover of more than six billion US dollars; or

(b) acquiring of control by a person over an enterprise when such person has already direct or indirect control over another enterprise engaged in production, distribution or trading of a similar or identical or substitutable goods or provision of a similar or identical or substitutable service, if--

(i) the enterprise over which control has been acquired along with the enterprise over which the acquirer already has direct or indirect control jointly have,--

(A) either in India, the assets of the value of more than rupees one thousand crore or turnover of more than rupees three thousand crore; or (B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars or turnover more than fifteen hundred million US dollars; or

(ii) the group, to which enterprise whose control has been acquired, or is being acquired would belong after the acquisition, jointly have or would jointly have,-- (A) either in India, the assets of the value of more than rupees four thousand crore or turnover of more than rupees twelve thousand crore; or

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 210 of 213 (B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars or turnover of more than six billion US dollars; or

(i) the enterprise remaining after merger or the enterprise created as a result of the amalgamation, as the case may be, have,--

(ii) the group, to which the enterprise remaining after the merger or the enterprise created as a result of the amalgamation, would belong after the merger or the amalgamation, as the case may be, have or would have,-- (A) either in India, the assets of the value of more than rupees four thousand crore or turnover of more than rupees twelve thousand crore; or (B) in India or outside India, the assets of the value of more than two billion US dollars or turnover of more than six billion US dollars. Explanation.--For the purposes of this section,--

(a) "control" includes controlling the affairs or management by--

(i) one or more enterprises, either jointly or singly, over another enterprise or group;

(ii) one or more groups, either jointly or singly, over another group or enterprise;

(b) "group" means two or more enterprises which, directly or indirectly, are in a position to--

(i) exercise twenty-six per cent. or more of the voting rights in the other enterprise; or

(ii) appoint more than fifty per cent. of the members of the board of directors in the other enterprise; or

(iii) control the management or affairs of the other enterprise;

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 211 of 213

(c) the value of assets shall be determined by taking the book value of the assets as shown, in the audited books of account of the enterprise, in the financial year immediately preceding the financial year in which the date of proposed merger falls, as reduced by any depreciation, and the value of assets shall include the brand value, value of goodwill, or value of copyright, patent, permitted use, collective mark, registered proprietor, registered trade mark, registered user, homonymous geographical indication, geographical indications, design or layout-design or similar other commercial rights, if any, referred to in sub-section (5) of section 3."

49. Vide para 4 of the Resolution Plan on overview of the

implementing entity / resolution applicant, it reveals that the resolution

applicants group turnover is Rs.84,447 crore in the year 2019-2020

(para 4.2.2 of the Resolution Plan- page 253 of CA(AT) (Ins) No. 503 of

2021). Vide para 7.1.2 of the Resolution Plan, the Resolution Applicant

has accepted the requirement of approval / permission of CCI in

accordance with the Code prior to the approval of CoC. In the 19th CoC

meeting held on 11.11.2020, the CoC were apprised of acknowledgment

copy of the applications filed with the CCI seeking CCI approval of the

resolution under the present case. BOB enquired for such requirements

also. However, we could not find even in 20th & 21st CoC meeting (page

199-322 of the Appeal paper book) whether such approval from CCI has

been obtained or not, while the Resolution Plan was approved by the

CoC in the 19th CoC meeting. Hence, it is very much clear that prior

approval of the CCI has not been obtained as per proviso to section

31(4) of the Code. This reflects that the approved Resolution Plan

requires review and reconsideration for the legal compliances. Statutory

compliances does not fall under the commercial wisdom of the CoC.

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 212 of 213 Hence, the statutory compliances as mandated by proviso to Section 31

(4), have to be ensured before the Resolution Plan is approved by CoC.

D. Conclusion

50. In view of the above stated analysis of facts and law, we have

come to the conclusion that Section 30 (2)(b) of the Code has not been

complied with and hence, the approval of the Resolution Plan is not in

accordance with Section 31 of the Code. Accordingly, the approval of

Resolution Plan by the CoC as well as Adjudicating Authority is set

aside and the matter is remitted back to CoC for completion of the

process relating to CIRP in accordance with the provisions of the Code.

All IAs stands disposed of.

Appeal CA(AT) (Ins) No. 650 of 2021 dismissed whereas Appeal CA(AT)

(Ins) No. 503, 505, 529, & 545 of 2021 allowed as indicated above.

No order as to costs.

[Justice Jarat Kumar Jain] Member (Judicial)

[Dr. Ashok Kumar Mishra] Member (Technical)

05th January, 2022 New Delhi, Raushan.K

Company Appeal (AT) (Ins) No. 503, 505, 529, 545 & 650 of 2021 Page 213 of 213

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