Dr. Arabinda Kumar Rath vs Mr. Siba Kumar Mohapatra

Company Appeal (AT) (Insolvency) No. 1482 of 2023 [Arising out of the Impugned Order dated 09.08.2023 passed by the Adjudicating Authority, National Company Law Tribunal, New Delhi Bench-II in I.A. No. 5617/ND/2022 in C.P. (IB) No. 1243(ND)/2018] In the matter of: DR. ARABINDA KUMAR RATH Suspended Board of Director of The Corporate Debtor S/o Sasibhushana Rath, D-155, Sarita Vihar, New Delhi- 110076 e-mail: akrath.dr@gmail.com ...Appellant Versus

SIBA KUMAR MOHAPATRA Resolution Professional Medirad Tech India Limited Flat No. E/402, Baishnav Vihar, Bomikhal, Near Durga Mandap, Bhubaneswar- 751010 ip.medirad@gmail.com ...Respondent

Present:

For Appellant : Mr. Tishampati Sen, Mr. Shubhanshu Gupta, Advocates.

For Respondent : Mr. Gaurav Mitra, Mr. Shouryendu Ray, Ms. Vatsala Poddar, Ms. Aarushi Mishra, Ms. Neelu Mohan, Advocates.

JUDGMENT

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

The present appeal filed under Section 61 of Insolvency and Bankruptcy

Code 2016 ('IBC' in short) by the Appellant arises out of the Order dated

09.08.2023 (hereinafter referred to as 'Impugned Order') passed by the

Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-II) in I.A. No. 5617/ND/2022 in C.P. (IB) No. 1243(ND)/2018. By the impugned order,

the Adjudicating Authority has approved the Resolution Plan of the Successful

Resolution Applicant ("SRA" in short) and dismissed the objections raised by

erstwhile management of the Corporate Debtor. Aggrieved by the impugned

order, the present appeal has been preferred by the Appellant who is a member

of the suspended Board of Director of the Corporate Debtor.

2. Coming to the brief factual background of the present case at hand, M/s

Medirad Tech India Ltd.-Corporate Debtor was admitted into the rigours of

Corporate Insolvency Resolution Process ("CIRP" in short) following the

admission of Section 7 application filed by M/s India SME Assets Reconstruction

Company Ltd. (ISARC) on 08.12.2021. Following the initiation of CIRP, the

Interim Resolution Professional who was later confirmed as the Resolution

Professional ("RP" in short) constituted the Committee of Creditors ("CoC" in

short) comprising of two members, namely, Technology Development Board

(TDB) and ISARC and invited plans for resolution of the Corporate Debtor. The

RP had submitted before the CoC two resolution plans received from Prospective

Resolution Applicants ("PRAs" in short) as may be seen from the minutes of the

5th CoC meeting held on 05.05.2022. After due scrutiny of the plans on the basis

of the evaluation matrix, Asian Institute of Oncology Pvt. Ltd. (AIOPL) emerged

as SRA in the 9th CoC meeting. The RP submitted IA No. 5617 of 2022 before the

Adjudicating Authority seeking approval of the resolution plan submitted by the

SRA. The Adjudicating Authority approved the resolution plan dismissing the

objections raised by the present Appellant to the said resolution plan. Aggrieved

by the impugned order, the present appeal has been preferred by the Appellant.

Page 2 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023

3. Making his submissions, Shri Tishampati Sen, Ld. Counsel for Appellant

submitted that the RP had conducted the CIRP of the Corporate Debtor in a

malafide manner whereby recovery by the secured Financial Creditors was

accorded undue primacy at the cost of the interests of the Corporate Debtor. The

RP had allowed the secured Financial Creditors to unduly inflate their claims

which claims did not mirror the position reflected in the financial records of the

said Financial Creditors. The Adjudicating Authority had also brushed aside the

objections raised by the Appellant to the exaggerated claims filed by the Financial

Creditors on the pretext that there was no inter se complaint or objections by the

Financial Creditors in respect of each other's claim. It was emphatically asserted

that this was not a fair and transparent manner of handling the serious

objections raised by the Appellant with regard to inflated claims having been

allowed by the RP. The Adjudicating Authority also erred in approving the

resolution plan even though the plan attributes were not beneficial for the

Corporate Debtor on account of inflated claims having been allowed for the

Secured Financial Creditors.

4. The valuation of the Corporate Debtor had been artificially exaggerated

with the fair value having been kept at Rs 50.73 Cr. and the liquidation value at

Rs 40.51 Cr. The basis for arriving at the above valuation figures was not clear.

Inspite of the request of the Appellant made to the RP for providing the valuation

report, the request had been rejected. Assertion was also made that the RP did

not disclose all requisite material information in the RFRP while inviting plans

from the PRAs. It was not disclosed that the land on which the hospital business

of the erstwhile Corporate Debtor was running was lease land granted by the

Page 3 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 Government of Odisha which lease was for a specific purpose. The PRAs and SRA

were unaware of the conditions of the lease basis. The Lease Deed clearly

stipulated that the land was given to the Corporate Debtor for a specific purpose

and any change of the conditions of lease would lead to its termination. As this

aspect was not brought to the attention of either the CoC or the PRAs by the RP,

hence, the resolution plan of the SRA did not deal with these aspects of Lease

Deed and the permission to mortgage. It was therefore contended that the

current resolution plan of the SRA was bound to fail.

5. Refuting the contentions of the Appellant, Shri Gaurav Mitra, Ld. Counsel

for the Respondent-RP asserted that the Appellant who was a member of the

suspended management of the Corporate Debtor has failed to substantiate any

of the grounds enumerated under Section 61(3) of the IBC basis which the

approval of the resolution plan could have been challenged. It was further added

that the plan submitted by the SRA has been fully implemented. The SRA had

already paid Rs 47.05 Cr. to both Financial and Operational Creditors besides

paying for CIRP costs. The SRA had also infused fresh capital by issue of shares

and put in place a new Board of Directors and the cancer hospital was already

operational under the leadership of a reputed, experienced and highly decorated

oncologist. It was also submitted that the objections raised by the Appellant with

regard to alleged inflated claims of the Financial Creditors was misleading.

Emphasising that both the Secured Financial Creditors had public profile and

therefore could not have behaved in an unbecoming manner, it was added that

TDB was a statutory body set up by the Ministry of Science and Technology,

Page 4 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 Govt. of India, while the other Financial Creditor-ISARC was a consortium of

banks which included a public-sector bank namely IDBI Bank.

6. It is also contended that the charge made by the Appellant that the

resolution plan of the SRA suffered from deficiencies as the RFRP was silent

about the land lease deed of the erstwhile Corporate Debtor lacks foundation.

Asserting that there was no evidence of non-compliance of the lease-deed, it was

submitted that there was no change in the land-use since the SRA was also

running a hospital akin to what was being run by the Corporate Debtor but for

the fact that it was being run on a more expanded scale along with scope for

development of a Research Centre in the future. It was vehemently contended

that the Appellant had no locus to comment on whether there had been any

breach of any conditions of the lease as it was the Government of Odisha which

was the appropriate entity to decide on whether there was any deviation from

the terms and conditions of the Lease Deed. Furthermore, the RP had taken

appropriate and sufficient steps to keep the Government of Odisha apprised of

the status of CIRP and the filing of resolution plan. Moreover, the fact that the

SRA was to take all steps in line with the order of the NGT for forest clearance

had also been communicated by the RP to the CoC including the factum that

additional time was required by the SRA for filing of application for forest

clearance under the Forest Conservation Act, 1980.

7. We have duly considered the arguments advanced by the Learned

Counsels for both the parties and perused the records carefully.

8. The primary objection of the Appellant on the conduct of the RP was that

the claims admitted in respect of the two Financial Creditors were not in

Page 5 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 conformity with their respective financial records and that the RP had

manipulatively allowed them to artificially balloon their claims. Elucidating their

arguments, it was stated that the claim of ISARC as on 10.06.2018 was Rs 39.20

Cr. However, the amount which had been admitted by the RP was Rs 60.04 Cr.

It was alleged that the RP has also not taken into consideration the fact that the

Corporate Debtor had paid certain sums of money to one of the consortium

lenders - IDBI Bank. As regards TDB, it was pointed out that as against the 24th

Annual Report of the TDB for 2020-21 which depicted only an amount of Rs

11.14 Cr. as due from the Corporate Debtor, the claim which had been admitted

by the RP was Rs 30.19 Cr. Like in the case of ISARC, even in the case of TDB,

the RP did not factor in the payment of certain sums of money by the Corporate

Debtor to TDB. The quantum of debt was thus not quantified by the RP

appropriately as it did not take into consideration the paid amounts. It was

vehemently contended that though serious objections were raised by the

Appellant before the Adjudicating Authority on the manner in which the RP had

admitted the claims, the same was dismissed by the Adjudicating Authority on

the flimsy and technical ground that since there was no inter se complaint on

the quantum of claims amongst the two Secured Financial Creditors, the

Appellant had no grounds to press on with their objections. Simply because TDB

which had initially contested the claims filed by ISARC but did not persist with

their objection to the claim of ISARC, this was not a valid ground to dismiss the

objections raised by the Appellant.

9. Per contra, the RP contended that the Appellant has cleverly attempted to

truncate the claims of the Secured Financial Creditors by selective use of

Page 6 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 documents to misrepresent facts. It was submitted by the RP that with a view to

buttress their distorted contention that the outstanding amount of TDB was only

Rs 11.14 Cr, the Appellant has relied on the 25th Annual Report of TDB for 2021

and selectively confined itself to the entry made therein under the heading

"Provision of interest and additional interest". The Appellant has deliberately not

brought to the fore the fact that following an arbitration initiated by them, an

Arbitration Award was announced on 25.05.2015. This award granted TDB Rs

14.98 Cr. along with interest pendente lite @ 15% p.a. from 19.08.2011 till the

date of award and future interest @ of 15% till realization. When reckoned along

with arbitration award amount, the outstanding dues to TDB worked out to Rs

30.19 Cr. and hence the claim of Rs 30.19 Cr. has been correctly admitted by

the RP on the basis of documents appended to Form-C. As regards their

allegations that the claim raised in respect of ISARC was also inflated, it was

asserted that the allegation of the Appellant was equally misconceived. It was

pointed out that the order of the Adjudicating Authority admitting the Corporate

Debtor into CIRP was based on the default submitted by the ISARC-Financial

Creditor as on 10.06.2018. However, since the Corporate Debtor was admitted

into CIRP on 08.12.2021, interest amount had clearly accrued thereon as

follows: (a) loan of Rs 1,00,00,000 at 14% for IDBI's facility dated 06.08.2000

along with 2% penalty and 16.5% along with 2.05% penalty for IDBI loan dated

23.04.2004; and (b) loan of Rs 5,00,00,000 at 11.5% for Axis Bank's term loan

and Rs 10,77,88,871 at 10.75% on its funded interest term loan. Hence the claim

of ISARC was realistic and not artificially bloated as alleged by the Appellant.

Moreover, the Appellant had only taken cognisance of the orders of the DRT

Page 7 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 dated 22.04.2022 in respect of ISARC claim. It is the case of the RP that the

order of DRT was only in respect of the loan obtained from Axis Bank and did

not reflect the loan received by the Corporate Debtor from the other consortium

lender that is the IDBI Bank.

10. At this stage it may be useful to notice the treatment given by Adjudicating

Authority in the impugned order to the purported allegation of the Appellant that

the claims lodged by the two Financial Creditors were inflated and unrealistic.

We find that the Adjudicating Authority has noticed that on an earlier occasion,

TDB had raised concerns on the veracity and tenability of the claims lodged by

ISARC. The TDB had objected to the claim amount of ISARC as accepted by the

RP. Aggrieved with the RP in this regard, the TDB had filed IA No. 903 of 2021

before the Adjudicating Authority seeking details of Form-C which had been filed

by the ISARC regarding their claims. This prayer of the TDB had been allowed

by the Adjudicating Authority on 04.10.2022 following which the RP had

furnished the detailed particulars contained in Form-C filed by the ISARC to

TDB. We notice that the TDB after receiving Form-C of ISARC did not pursue the

matter any further which amply manifests that the doubts entertained by TDB

regarding the claims filed by ISARC stood dissipated. This clearly exhibits that

the TDB had elected not to dispute the claims admitted qua ISARC and did not

raise any further discrepancies on the claims of ISARC.

11. In such circumstances, we are of the considered view that it was only

reasonable on the part of the Adjudicating Authority to infer that the

apprehensions of the TDB in respect of the claim filed by ISARC stood allayed.

We are also inclined to agree with the RP that when there were only two Financial

Page 8 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 Creditors in the CoC and they had settled their doubts and ambiguities about

each other's claim and there was no inter se dispute between them on the

quantum of claim, they had actually opted and chosen to put a quietus to the

matter. That being the ground situation, the suspended management of the

Corporate Debtor has no locus to raise unfounded allegations about the

quantum of claims claimed by the Financial Creditors and admitted by the RP.

When TDB was fully satisfied about the fairness and reasonableness of the claim

filed by the other Financial Creditor, we find no reasons to disagree with the

findings returned by the Adjudicating Authority that merely because the

Appellant was the personal guarantor of the ex-management, they cannot be

seen to unduly persist with their allegations that the claims of the Financial

Creditor were inflated and exaggerated to the detriment of the Corporate Debtor.

12. We now proceed to peruse the resolution plan of the SRA to see how it

has dealt with the claims lodged by the Secured Financial Creditors and

Operational Creditors. In respect of the proposed payment to the Secured

Financial Creditors, the plan abstract of the SRA is as reproduced below:

Secured Amount Claim 90 days from Total % of Financial Claimed Admitted termination of claim Creditors Lease and admit (Payment Service ted Bifurcation) agreements (charge free) or NCLT order whichever is later a Technology 3028,38,962 3019,15,435 1419,00,000 1419,00,000 47% Development Board b India SME 6004,96,232 6004,97,968 2881,00,000 2881,00,000 48% Asset Reconstructi on Company Limited Page 9 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 Secured 9033,35,194 9024,13,403 4300,00,000 4300,00,000 financial creditors (other than financial creditors belonging to any class of creditors)

We find that as against the admitted claim of Rs 30.19 Cr. of TDB, the latter had

received Rs 14.19 Cr. which is 47% of their admitted claim. ISARC had also been

paid Rs 28.81 Cr. which was 48% of their admitted claim. The Operational

Creditors including workmen, employees, statutory government dues and other

Operational Creditors have all been provided for 100% of their admitted claim in

the plan as may be seen at page 146 of Appeal Paper Book ("APB" in short). It

is also an undisputed fact that the SRA has paid the CIRP costs. When the

resolution plan of the SRA took care of the interest of every stakeholder

substantively and no complaint has been received from either the Secured

Financial Creditors or Operational Creditors of having been made to suffer any

arbitrary hair-cut, we do not see any merit in the bogey of admission of inflated

claims by the RP as raised by the Appellant.

13. This brings us to the second limb of argument of the Appellant that the RP

failed to effectively discharge his statutory responsibilities under the IBC in not

having disclosed crucial material information in the RFRP document with regard

to the land on which the hospital of the erstwhile Corporate Debtor was running,

in that it was a leased property, the lease having been granted by the

Government of Odisha on 02.11.2000. Submission has been pressed by the

Appellant that the lease was for a specific purpose and the Lease Deed clearly

Page 10 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 specified that any change in the conditions of the lease would lead to its

termination. It is the case of the Appellant that the RP did not include the

termination aspect of the lease in the RFRP and the resolution plan of the SRA

was silent on this count. The CoC was also informed about the lease much later

on 03.05.2023 during the 12th CoC meeting by the RP by which time the plan of

the SRA had already been approved by the CoC. The RP had only apprised the

CoC of the forest clearance aspect while keeping the CoC in the dark regarding

the directions of the Government of Odisha regarding compliance with the

condition of the Lease Deed and mortgage permission. Pointing out another

fallacy of the RP, it was submitted that the resolution plan of the SRA got

approved without taking consent from the Government of Odisha. It was

therefore strenuously contended by the Appellant that the Adjudicating

Authority had erroneously held that the RP had taken sufficient steps to keep

the Government of Odisha informed about the CIRP of the Corporate Debtor and

the resolution plan of the SRA. Attention was adverted to the decision of this

Tribunal in SEL Manufacturing Company Ltd. Vs Punjab Small Industries

& Export Corporation Ltd. in CA(AT)(Ins) No. 881 of 2022 wherein it has been

held by the Tribunal that the rights of Land Development authorities on assets

owned by them cannot be overridden by provisions of IBC. It was canvassed that

present is a case where non-compliance to the terms and conditions of the Lease

Deed was writ large and hence their objections to the resolution plan ought to

have been sustained by the Adjudicating Authority.

14. To arrive at our findings on this issue, it would be constructive to notice

the relevant excerpts of the letter dated 03.09.2022 from the Government of

Page 11 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 Odisha addressed to the RP with respect to the Lease Deed which reads as

follows:

C. The land schedule involved in the case is a leasehold land allotted by the GA & PG Deptt. for the purpose of establishment of "Information Technology Project on Radiation Therapy, Allied Sciences and Cancer Institute". GA & PG Deptt. has not been impleaded as a party before the Hon'ble Tribunal.

The clause (xiv) of the Register Lease Deed provides that, the lessee shall not without the consent in writing of the lessor use or permit the use of the said land for any purpose other than that for which it is leased or transfer the same without such consent. Further Clause-(xvi) of the Register Lease Deed provides that in the event of the closure/dissolution/defunct of the institution M/s Medirad Tech India Ltd., New Delhi, the lease land along with building if any thereon shall be the property of Government.

Further, it is pertinent to mention here that the land schedule involved in respect of the land relating to Mz-Jayadev Vihar is recorded in forest classification. As per the order of the Hon'ble National Green Tribunal in OA No. 29/2019, the user agency is required to regularise the matter by filing forest diversion proposal before the competent authority as per the provisions of F.C. Act, 1980.

You are therefore requested to take cognizance of the specific conditions contained in the Registered Lease Deed No. 6193 dtd. 03.11.2000 and No. 1435 dtd. 24.02.2006 read with the conditions mentioned in the NOC Order No. 2597 dtd. 28.02.2001 and No. 13985 dtd. 31.12.2002, while proceeding to resolve the insolvency matter as per the provisions of Insolvency & Bankruptcy Code (IBC) with the orders of Hon'ble National Company Law Tribunal (NCLT). Any deviation in overriding the terms and conditions of lease deeds executed by Government in GA & PG Department and the orders of the NOC issued at Government level may lead to future litigation.

(Emphasis supplied)

15. When we see the above letter from the Government of Odisha dated

03.09.2022 addressed to the RP, we find that the Government of Odisha had

clearly noticed that the Corporate Debtor had been admitted into CIRP vide order

dated 08.12.2021. This letter only informs the RP that while proceeding to

Page 12 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 resolve the insolvency matter in terms of the provisions of IBC, the RP may take

cognisance of the specific condition contained in the Registered Lease Deed No.

6193 dated 03.11.2000 and No. 1435 dated 24.02.2006 to desist from any

deviation in adhering to the terms and conditions of the Lease Deeds to avoid

future litigations. Perusal of the contents of this communication does not in any

manner manifest that the RP had committed any breach of the Lease Deed. All

that the Government of Odisha had communicated in the said letter to the RP

was to take adequate safeguards and precaution that the terms and conditions

of Lease Deed were not deviated from or get overrun in any manner. Material

placed on record also show that the RP had sent a reply on 29.08.2022 and

18.11.2022 to the Government of Odisha that all the points contained in their

letter of 03.09.2022 had been taken cognisance of.

16. We therefore do not find any material on record which substantiates that

the Lessor-Government of Odisha had raised any such objection that the land

lease deed has been violated. No permission was either necessary from

Government of Odisha since there was no change in the purpose of the use of

the land. Neither was the land being put for sale. The business activity of the

SRA pursuant to approval of resolution plan was for the same purpose for which

Lease Deed had been granted to the suspended management. Furthermore, as

to whether the terms of conditions of the Lease Deed had been breached or not

is an issue to be examined and determined by the Government of Odisha, the

latter being the Lessor. The Appellant being the suspended management of the

Corporate Debtor has no locus standi to decide whether the Lease Deed had been

breached or not. Furthermore, when we see the manner how the Corporate

Page 13 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 Debtor was using the leased land, admittedly it was for the purpose of running

a 50 bedded cancer hospital. When we see the terms of the resolution plan, the

SRA was also intending to continue with running a cancer hospital, albeit, with

an expanded capacity of 150 beds. It is therefore self-evident that there is no

change in the land-use except that the scale of the hospital has been enlarged.

We also notice that the Adjudicating Authority at paragraphs 18 to 25 of the

impugned order noticed in detail the exchange of communication between the

RP and the Government of Odisha about the status and progress of the CIRP

proceedings. Hence, the Adjudicating Authority did not commit any error in

coming to the conclusion that the RP had taken appropriate steps to keep the

Government of Odisha apprised of the status of the CIRP and on the filing of

resolution plan duly approved by the CoC. As regards forest clearance too, the

RP had sent a letter to the Government of Odisha on 18.11.2022 requesting for

additional time to file an application seeking forest clearance under the Forest

Conservation Act 1980, since the resolution plan was pending approval of the

Adjudicating Authority and that the SRA was to take necessary steps in line with

the order of the NGT for forest clearance. We therefore do not find any infirmity

in the finding returned by the Adjudicating Authority that no breach of the lease

deed had been pointed out by the Government of Odisha and that the RP had

scrupulously complied to the suggestions and directions of the Government of

Odisha which was the Lessor.

17. The reliance placed by the Appellant on SEL Manufacturing Company

Ltd judgment supra is also misplaced since in that case there was non-

compliance to the terms and conditions of the Lease Deed with the SRA not

Page 14 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 having paid the demand for enhanced land cost raised by the land holding

authorities much before the initiation of CIRP. The present is not a case, where

any such demand from any sovereign land authority remained unmet. Nor do we

find any communication from the Government of Odisha citing breach of the

terms of Lease Deed by the SRA.

18. It is also one among the many objections raised by the Appellant that the

RP did not conduct the valuation exercise properly. The valuation exercise was

allegedly facilitated by the RP in a manner which unduly benefitted the Secured

Financial Creditor at the cost and detriment of the interest of the Corporate

Debtor. It was also contended that the valuation report of the Corporate Debtor

was not shared with the Appellant inspite of requesting for these reports.

19. When we see the material available on record, we notice that in accordance

with the CIRP Regulations and Section 25 of IBC, the RP had appointed

registered valuers for conducting valuation exercise. The obligation of the RP

under CIRP Regulations and IBC is limited only to the appointment of the

registered valuers, while the valuation is to be approved by the CoC under the

mandate of commercial wisdom. Thus, the RP cannot be faulted on this count

as it had discharged its statutory responsibility having appointed the valuers

and submitted their report to the CoC for its consideration.

20. The approval of the valuation of Corporate Debtor is an exercise which

falls under the purview of commercial wisdom undertaken by the CoC. The scope

of interference by the Adjudicating Authority in the commercial wisdom

exercised by the CoC is minimal. Since the Appellant had no right to vote in the

meeting of the CoC, they cannot be said to have suffered from any prejudice for

Page 15 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 not being provided with the valuation report. Whether the detailed valuation

report was placed before the Appellant or not is immaterial and irrelevant since

it is only the members of the CoC who were required to exercise the commercial

wisdom on the valuation reports placed before them and not the Appellant who

did not have the right to exercise their vote.

21. Coming to the non-sharing of the valuation reports, as per the CIRP

regulations, the RP is not required to share the valuation with any entity except

the members of the CoC that too after obtaining confidentiality undertaking. The

Adjudicating Authority has rightly held at para 29 that there is no provision

under IBC or the CIRP Regulations framed thereunder which necessitates the

valuation report of the Corporate Debtor to be shared with the suspended

management of the Corporate Debtor. The confidential nature of the fair value

and liquidation value of the Corporate Debtor is highlighted in Regulation 35(2)

of the CIRP Regulations and the RP is not obligated to share these reports with

anyone but for the members of the CoC. The RP had not violated the statutory

construct of the IBC in not acceding to the request of the Appellant to provide

them with the valuation report. We therefore do not find any merit in the

contention of the Appellant that by not getting access to the valuation reports,

they were denied their due. On the contrary, we affirm the decision of the

Adjudicating Authority that in the given circumstances, no irregularity stands

proven to have been committed by the RP.

22. Another argument canvassed by the Appellant was that the settlement

proposed by them under Section 12(a) had not been paid any heed either by the

RP or the CoC. We have no doubt in our mind that the RPs jurisdiction is Page 16 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 restricted only to presenting any settlement offer before the CoC and it strictly

lies on the commercial wisdom of the CoC to accept or reject the aforesaid offer.

Having placed the Appellant's settlement offer before the CoC, the RP therefore

cannot be faulted on this score. The settlement offer of the Appellant under

Section 12-A had been discussed in the 6th CoC meeting. ISARC during the said

CoC meeting had agreed to review the settlement offer though it is also an

undisputed fact that the Appellant did not receive any response from ISARC on

their settlement offer. The representatives of TDB during the meeting had also

stressed that any repayment plan in terms of the settlement had to also cater to

the interests of TDB and not only that of ISARC. If the Financial Creditors did

not respond to the offer and CoC proceeded ahead to approve the resolution plan

of the SRA, it was an act of exercise of commercial wisdom of the CoC. The

Financial Creditors were not obligated to respond to the settlement offer. It is

settled law that the collective business decision of the CoC cannot be interfered

with either by the RP or the Adjudicating Authority. Hence the complaint of the

Appellant that their settlement offer did not receive deserve due regard is

misplaced and cannot be sustained.

23. Much emphasis was laid by the Respondent that it is settled law that to

challenge the order of the Adjudicating Authority approving a resolution plan,

the same has to be strictly confined to the grounds set out in Section 61(3) of

the IBC as has been held by the Hon'ble High Court in Arcelor Mittal (P) Ltd.

Vs Satish Kumar Gupta 2018 SCC Online SC 1733 wherein it has been held

that "an appeal from an order approving such plan is only on the limited grounds

laid down in Section 61(3)". It was vehemently contended that the Appellant has

Page 17 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 failed to show any irregularity or infraction or breach of any of the grounds

outlined under Section 61(3) of the IBC. Since the Appellant is trying to reopen

the resolution plan for adjudication on grounds which are beyond the purview

of the Appellate Authority, the appeal deserves to be set aside.

24. The resolution plan was approved with 100% vote share in the 9th CoC

meeting on 06.06.2022. The plan having been approved by full majority, we are

of the considered view that the Adjudicating Authority did not commit any error

while approving the resolution plan after noting its satisfaction about the plan

being compliant to the provisions of the IBC in terms of Section 30(2) of the IBC.

Law is now well settled that the jurisdiction of the Adjudicating and Appellate

Authorities to interfere with approval of the resolution plan is limited. The scope

of judicial review is confined to the provisions contained in Section 30(2) of the

IBC for the Adjudicating Authority and Section 61(3) for the Appellate Authority.

There is only limited review which can be exercised by the Adjudicating Authority

or the Appellate Authority.

25. We are guided by the judgement of the Hon'ble Supreme Court in

Ngaitlang Dhar v. Panna Pragati Infrastructure Private Limited in CA No.

3665-3666 of 2020 wherein it has been held: -

"31. It is trite law that 'commercial wisdom' of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the processes within the timelines prescribed by the IBC. It has been consistently held that it is not open to the Adjudicating Authority (the NCLT) or the Appellate Authority (the NCLAT) to take into consideration any other factor other than the one specified in Section 30(2) or Section 61(3) of the IBC.

It has been held that the opinion expressed by the CoC after due deliberations in the meetings through voting, is the collective business

Page 18 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023 decision and that the decision of the CoC's 'commercial wisdom' is non justiciable, except on limited grounds as are available for challenge under Section 30(2) or Section 61(3) of the IBC. This position of law has been consistently reiterated in a catena of judgments of this Court, including:

(i) K. Sashidhar v. Indian Overseas Bank

(ii) Committee of Creditors of Essar Steel India Limited through authorized signatory v. Satish Kumar Gupta,

(iii) Maharashtra Seamless Limited v. Padmanabhan Venkatesh,

(iv) Kalpraj Dharamshi v. Kotak Investment Advisors Limited,

(v) Ghanashyam Mishra and Sons Private Limited through the Authorized Signatory v. Edelweiss Asset Reconstruction Company Limited through the Director"

26. As long as the statutory provisions of the IBC and the CIRP Regulations

framed thereunder are complied with, it is the commercial wisdom of the

requisite majority of the CoC which is to negotiate and accept a resolution plan.

Once all the mandatory requirements have been duly complied with and taken

care of, the Adjudicating Authority cannot deal with the merits of Resolution

Plan unless it is found it to be contrary to the express provisions of law and

against the public interest. There is neither any material irregularity nor

contravention of any provision of law by the CoC which has been justifiably

substantiated by the Appellant. In the present case when no valid grounds have

been made out to challenge the approval of the resolution plan, the legislative

fiat of the IBC that the Adjudicating Authority cannot trespass upon the

business decision of the CoC holds ground. We have no doubts in our mind that

the plan has been rightly approved by the Adjudicating Authority on having

successfully passed the muster of commercial wisdom of CoC.

Page 19 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023

27. In view of the reasons stated above, we find no good grounds to interfere

with the impugned order. We find no merit in the Appeal. The Appeal is

dismissed with no costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

Place: New Delhi Date: 07.05.2025

Abdul/ Harleen

Page 20 of 20 Company Appeal (AT) (Ins) No. 1482 of 2023