Idbi Bank Limited vs Ms. Mamta Binani & Ors

[Arising out of an order dated 9th May, 2019 passed in I.A. No. 24 of 2019 in C.P.(IB) No. 41/7/HDB/2017 by the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Hyderabad)]

IN THE MATTER OF:

1. IDBI BANK Through its authorised signatory, IDBI Tower, WTC Complex, Cuffe Parade, Mumbai- 400 005 .. Appellant

VERSUS

1. MS. MAMTA BINANI Resolution Professional, Deccan Chronicle Holdings Limited 2A, Ganesh Chandra Avenue, Commerce House, 4th Floor, Room No. 6 Kolkata- 700 013. .. Respondent No. 1

2. VISION INDIA FUND-SREI MULTIPLE ASSET INVESTMENT TRUST Vishwakarma, 86C, Topsia Road (South) Kolkata - 700 046 .. Respondent No. 2

3. COMMITTEE OF CREDITORS Through Canara Bank 3-5-879, Old MLA Quarters Road, Narayanguda Andhra Pradesh, Hyderabad, Telangana-500 029 .. Respondent No. 3 2

Company Appeal (AT)(Insolvency) No. 553 of 2019

Present:

For Appellants: Mr. Abhinav Vasisht, Sr. Advocate with Mr. Sidhartha Barua, Ms. Priya Singh, and Mr. Praful Jindal, Advocates. For Respondents: Mr. Abhijeet Sinha, Ms. Mamta Binani, Mr. sidhartha Sharma, Mr. Arjun Asthana and Mr. Saikat Sarkar, Advocates for R-1 Mr. Rishav Banerjee and Mr. Saptarshi Mandal, Advocates for R-2 Mr. Dhruv Mehta, Sr. Advocate, with Mr. PBA Srinivasan, Mr. Keith Varghese, Mr. Parth Tandon and Ms. Prerna Sabharwal, Advocates for R-3 Mr. Arvind Nayar, Sr. Advocate with Mr. Amit Mahliyan, Advocates for Kotak Mahindra Bank. Mr. Rajshekhar Rao, Sr. Advocate with Mr. Zeeshan, Mr. Satwik Misra, Ms. Meerunissa Anand, Ms. Gunjan Dogra and Mr. Yash Vardhan, Advocates for Intervenor. Mr. Akshat Hansari along with Mr. Tanmay Arora, Advocates for ICICI

JUDGMENT

[2nd September, 2022]

(Per Hon'ble Mr. Justice M. Satyanarayana Murthy)

This appeal, under Section 61 of Insolvency and Bankruptcy Code,

2016 (hereinafter referred as 'IBC'), has been filed challenging the order

dated 9th May, 2019 passed by National Company Law Tribunal,

Hyderabad Bench, Hyderabad (hereinafter referred as 'Adjudicating 3

Company Appeal (AT)(Insolvency) No. 553 of 2019

Authority') in I.A. No. 24 of 2019 in Company Petition(IB) No.

41/7/HDB/2017.

2. The Appellant is a member of Committee of Creditors (hereinafter

referred as 'CoC') and a Financial Creditor of Deccan Chronicle Holdings

Ltd. ("Corporate Debtor"). The Appellant filed an Application before the

Adjudicating Authority contending that the Resolution Plan dated

11.12.2018 submitted by Vision India Fund, a scheme floated by SREI

Multiple Asset Investment Trust ("Resolution Applicant") is illegal and

discriminatory and in violation of the Code and other applicable law.

3. It is contended that the Adjudicating Authority passed the order

erroneously dismissing the Application filed by the Appellant based on

erroneous appreciation of facts and law, and committed an error apparent

on the face of record and also arrived at a conclusion without recording

specific finding on specific issue raised by the Appellant, specific grounds

are as follows:

a) The order has been passed ignoring the provision of IBC and

settled principle of law and the Resolution Plan discriminating

inter-se the Financial Creditor in the treatment of their respective

claims. The Resolution Plan is also in direct violation of the order

dated 14.11.2108 passed in "Rajputana Properties Limited v.

Binani Industries Limited" and Company 4

Company Appeal (AT)(Insolvency) No. 553 of 2019

Appeal(AT)(Insolvency) No. 82 of 2018 which was affirmed by the

Hon'ble Apex Court in its order dated 19.11.2018.

b) In the earlier Plan the Resolution Applicant had offered an

amount of Rs. 50 Crores to the Appellant which is now reduced

to a substantial amount for no reason and grossly discriminated

the Financial Creditor - the Petitioner before the Adjudicating

Authority. The offered amount to the Appellant in the Resolution

Plan is only 3.9% of the total cash payment, despite the Appellant

having 6.71% of the total outstanding admitted financial debt

against the Corporate Debtor. As such the Financial Creditor has

to receive less than the pro-rata entitlement. Therefore, the

discriminatory treatment of this Appellant in offering the amount

is serious illegality.

c) The Resolution Plan ex facie discriminatory among inter-se

Financial Creditors and not treated the Financial Creditors

equally, who are placed on the same footing. Therefore, the order

is nonest and liable to be set aside at the threshold. It is also

contended that categorization of the Financial Creditors as

category 'A' and 'B' is not based on any material and such

identification of 'A' and 'B' categories is illegal. Apart from that,

the A Category Financial Creditors are inferior and has no

security in the assets, was created in their favour. 5

Company Appeal (AT)(Insolvency) No. 553 of 2019

d) The finding of the Adjudicating Authority that the Appellant is

having security interest of lower in value than held by the other

Financial Creditor without determining the amount of the

security interest of the Appellant is prima facie erroneous.

e) The classification of the Financial Creditors as 'A' & 'B' categories

based on the security interest created in their favour is an

erroneous appreciation of facts and the Adjudicating Authority

failed to consider the exact value of financial security created in

favour of Appellant and other categories, discriminated in the

offer made to this Appellant and that the Resolution Plan is not

in conformity with Section 30(2) of IBC though it is mandated as

per judgment of Apex Court in "Arcelormittal India Private

Limited v. Satish Gupta and Ors."1 . Thus the Adjudicating

Authority committed grave error in dismissing the petition filed

by the Petitioner questioning the basis of allotment of share of

amount in the approved Corporate Insolvency Resolution Plan

(hereinafter referred as 'CIRP') and requested to set aside the

order passed by the Adjudicating Authority and allow the

Application setting aside the Resolution Plan

1 Civil Appeal Nos. 9402-9405 of 2018 6

Company Appeal (AT)(Insolvency) No. 553 of 2019

4. The Resolution Professional - Ms. Mamta Binani, Respondent No. 1

herein, filed Reply Affidavit raising several objections while denying the

material grounds raised in the Appeal. The acceptance of Resolution Plan

is purely within the domain of CoC which has approved the Resolution

Plan with an overwhelming majority of 81.39% affirmative votes. Therefore,

acceptance of the Plan is based on commercial wisdom, same cannot be

set aside. The Respondent No. 1 diligently complied the requisites of

Section 30(2) of IBC before presenting the Resolution Plan for its approval

as evident from the order dated 03.06.2019 by Adjudicating Authority at

Hyderabad. After compliance of Section 30(3) by Respondent No. 1, the

Resolution Plan has been approved by CoC by majority of 81.39% vote.

5. Section 30(2)(e) of IBC does not empower Resolution Professional to

decide whether the Resolution Plan does or does not contravene the

provision of law, it only means that he/she will have to give prima facie

opinion to the CoC that law has or had not been contravened in view of

law declared by Hon'ble Apex Court in the case of "Arcelormittal India

Private Limited v. Satish Gupta and Ors referred supra.

6. The duties of Resolution Professional- 1st Respondent were

highlighted by the Hon'ble Supreme Court in the case of "Swiss Ribbons

& Anr. Vs. Union of India & Ors.2" and 1st Respondent acted strictly in

2 (2019) 4 SCC 17 7

Company Appeal (AT)(Insolvency) No. 553 of 2019

accordance with the duties prescribed. It is also contended that the

Respondent No. 1 is not required to express his/her opinion as held in the

case of "K. Sashidhar Vs. Indian Overseas Bank & Ors."3 and

Respondent No. 1 did not commit any error in placing the Resolution Plan

before the CoC and violated any law or provision of IBC. Therefore, the

Resolution Plan approved by CoC and Adjudicating Authority cannot be

overturned on the allegation that the Appellant was discriminated in

allotting the amount and requested to dismiss the appeal.

7. Canara Bank, filed Reply Affidavit, inter alia contending that the

Resolution Plan envisaged the condition for each of the Financial Creditors

in category-'B' lenders had exclusive security interest in the manner

specified in Exhibit 'E' of the Resolution Plan on the assets of the

Respondent No. 1. It is pertinent to mention here that in the Resolution

Plan, it is specifically mentioned that the Corporate Debtors shall

categorize each of the Financial Creditors Category-'B' & 'A' lenders

without any further documentation to deal with the respective assets on

which they have exclusive charge in such manner as they deem fit at their

own cost and expenses without any recourse to the Corporate Debtor or

the Special Purpose Vehicle or the Resolution Applicant.

3 Civil Appeal No. 10673 of 2018, (2018) IbcLaw.in 31 SC 8

Company Appeal (AT)(Insolvency) No. 553 of 2019

8. It is further contended that on 09.07.2018, the Resolution Plan was

re-submitted by Resolution Applicant for CoC voting which was rejected

for want of requisite percentage of votes. Therefore, the Resolution

Applicant resubmitted the Resolution Plan on 11.12.2018, wherein the

allocation of funds was done on the basis of categorization of the Financial

Creditors into Financial Creditor Category-'A' and Category -'B'. The said

category was allocated by the Resolution Applicant due to lack of

consensus amongst the members of the CoC. The allocation was made

among the Financial Creditors based on security interest held by each

Financial Creditor. The Financial Creditor based on security in their favour

were categorized in two categories i.e. Category 'A' and Category 'B'.

9. Canara Bank is not Resolution Applicant but one of the Financial

Creditors, who, however filed I.A. No. 252 of 2018 and sought direction

against the Resolution Professional to consider the liquidation value

attributable to Financial Creditor on priority charge basis and placed

revised claim filed on 30.06.2018 for approval by the Resolution

Professional before the CoC again for voting which was allowed by the

Adjudicating Authority vide order dated 06.08.2018 directing the

Resolution Professional to place revised claim submitted by Financial

Creditor i.e. on priority charge basis before the CoC for consideration. 9

Company Appeal (AT)(Insolvency) No. 553 of 2019

10. It is specifically contended that the Hon'ble Apex Court in "K.

Sashidhar Vs. Indian Overseas Bank & Ors." referred supra, made an

observation that if objection to the Resolution Plan is on account of

infraction of grounds specified in Sections 30(2) and 61(3) that must be

specified and expressly raised at relevant time. The approval of Resolution

Plan can be challenged only on those grounds. Moreover, the proposed

Resolution Plan is purely a commercial or business decision, the same

being non justiciable, is not open to challenge before the Adjudicating

Authority or before this Tribunal. The Respondent also further contends

that CoC has taken due care in allotment of voting percentage but the

Respondent was relying on the common amended Section 216. The

Respondent contended that threshold voting of 66% was in accordance

with the provision specified in IBC as the same was prior to amendment

dated 17.08.2018 which reduced the voting percentage to 51%. The

categorization of Financial Creditor into Category 'A' and 'B' was not

discriminatory inter-se and the same was explained, contending that it

was based on the value of security interest created in favour of individual

Financial Creditor.

11. It is specifically contended by the Respondent that in the Minutes of

20th Meeting of the CoC, it has been duly recorded that the Appellant

herein has serious objection which are mentioned as under: 10

Company Appeal (AT)(Insolvency) No. 553 of 2019

"IDBI raised question that the RA has not given any basis of distribution in the Resolution Plan or to CoC members, to which the PA displayed the reply given by the RA dated 28.09.2018...

IDBI then asked the CoC legal counsel whether it has seen that Plan is discriminatory or not and why is this question not being dealt with by the legal counsel and also mention to Mr. Mishra to specifically examine in terms of its legal validity..."

12. It is further stated that the objections raised by the Appellant were

discussed and the CoC rejected the objections of the Appellant in 20th

Meeting of CoC as the Resolution Plan was legally complied as under:

"Mr. Mishra mentioned that as a legal counsel of the CoC, it has given the legal clearance to the Resolution Plan dated 20.11.2018 from a legal perspective and said to IDBI that the 2 clauses that has been specifically mentioned by IDBI has also been looked into and it is legally compliant."

13. Therefore, the contention of the Appellant that it was discriminated

is without any basis.

14. It is further contended that the approval of Resolution Plan by CoC

is purely a commercial decision taken by CoC and the same cannot be

interfered either by Adjudicating Authority or by this Tribunal, since it was

accepted in the 20th CoC Meeting dated 10.12.2018 with approved majority 11

Company Appeal (AT)(Insolvency) No. 553 of 2019

of 81.39%. The Respondent admitted that Memorandum of Understanding

dated 30.05.2014 executed between the Axis Bank, Canara Bank, ICICI

Bank Ltd., IDBI Bank Ltd., IDFC Ltd., Kotak Mahindra Bank Limited

wherein the parties agreed as follows:

"1. Sale of Trademarks:

(a) The Parties hereby agree for sale of Trademarks namely "Deccan Chronicle", "Andhra Bhoomi", "The Asian Age" and "Financial Chronicle" without recourse to the legal process; i.e. either through a fresh tendering process in exercise of the powers conferred on IBI Bank under a power of attorney executed in its favour or through such other process/procedure as may be mutually decided by the Parties.

(b) The sale process shall include fresh valuation of Trademarks, invitation of fresh tenders etc. and each such steps shall be decided by the Parties in consultation and in agreement with each other.

(c) The Parties agree that sale of Trademarks and realization of their value shall be without prejudice to the existing rights, claims and interest of each of the Parties and the proceeds of sale shall be deposited in a designated escrow account with a third party bank as mutually agreed among the Parties. It is further agreed that nothing contained in this MOU is intended or meant to alter, modify and impair any of the rights, claims, interest of the Parties against the Company under their respective Financing Documents." 12

Company Appeal (AT)(Insolvency) No. 553 of 2019

15. The Appellant is a dissenting Creditor in the 20th Meeting of CoC

and thereby the Appellant is not entitled to challenge the Resolution Plan

approved by CoC, so also Adjudicating Authority, consequently, the

Appellant is not entitled to claim any relief in the present appeal, requested

to dismiss the appeal in toto.

16. During hearing, learned Sr. Counsel, Mr. Abhinav Vasisht,

contended that the Appellant is having security interest in the property,

higher in value than the security interest created, in favour of other

secured Creditors thereby, the claim of Respondent No. 1 is not considered

by the CoC and the Adjudicating Authority errouneously. However, the

Appellant was discriminated in offering 3.9% of amount. Such

discriminatory treatment of the Appellant is a serious illegality which

vitiates the entire Resolution Plan and therefore the order in I.A. No. 24 of

2019 in C.P.(IB) No. 41/7/HDB/2017 is liable to be set aside.

17. Learned Counsel for 1st Respondent-RP contended that the order

passed by Adjudicating Authority is in accordance with law and that the

Appellant being dissenting Creditor is incompetent to question the

Resolution Plan on any ground when it was approved by CoC and

Adjudicating Authority, as it was in compliance with the legal provisions

contained under Section 30 IBC and Regulation 38 of Insolvency and 13

Company Appeal (AT)(Insolvency) No. 553 of 2019

Bankruptcy Board of India (Insolvency Resolution Process for Corporate

Persons) Regulations 2016. Apart from that the Appellant being dissenting

Creditor cannot challenge the Resolution Plan on any of the grounds,

since, the Resolution Plan was approved by CoC in its commercial wisdom

and is purely a commercial decision with a majority of 81.39% of voting.

As such, commercial decision taken by CoC is not subject to review by

Adjudicating Authority or by this Tribunal.

18. Whereas, Mr. Dhruv Mehta, learned Sr. Counsel vehemently

contended that the Appellant being a dissenting Creditor is not entitled to

question the commercial wisdom of CoC in approving the Resolution Plan

submitted by Vision India Fund-SREI Multiple Asset Investment Trust-

Resolution Applicant, relying upon several decisions, which will be referred

to at an appropriate stage, while deciding the real controversy.

19. Learned Counsel for the other Respondents supported the order

impugned in the appeal and they also filed their Written Submissions

which will be referred to at an appropriate stage, while deciding the real

controversy. However, Octopus Production Private Limited, Intervenor is

sailing with the Appellant, requested to send back the Resolution Plan to

CoC.

20. Considering the rival contentions, the points need be answered by

this Tribunal are as follows:

14

Company Appeal (AT)(Insolvency) No. 553 of 2019

a) Whether the Appellant is entitled to claim relief under Section

60(5) when the Resolution Plan was approved and attained

finality?

b) Whether the Appellant being dissenting secured Creditor is

competent to challenge approval of Resolution Plan by filing the

instant Appeal?

c) Whether the alleged discrimination overrides the commercial

wisdom of the CoC, if so, the order passed by the Adjudicating

Authority I.A. No. 24 of 2019 in C.P.(IB) No. 41/7/HDB/2017 is liable

to be set aside.

POINT NO. 1:

21. Admittedly, the Appellant is one of the Secured Financial Creditor

but the major contention of the Appellant before the CoC is that the

Appellant is having higher value security interest as the trademarks are

hypothecated to this Appellant by executing Deed of Hypothecation and

irrecoverable General Power of Attorney. Therefore, the Appellant got

priority but the CoC divided the secured Financial Creditors into two

categories and the Appellant was placed in category-A, who is not given

priority in payment of debt.

22. Learned Sr. Counsel for the Appellant Mr. Abhinav Vasisht has

drawn the attention of this Tribunal to the objections raised in the CoC

meeting held on 12.05.2018 and the 1st Resolution Plan was submitted as 15

Company Appeal (AT)(Insolvency) No. 553 of 2019

against which, he again raised objection in 12th CoC meeting dated

14.06.2018 about the categorization of A & B Secured Financial Creditors.

However, on 09.07.2018, Respondent No. 3 resubmitted earlier Resolution

Plan for CoC voting which was rejected, as 43.85 % of the CoC members

did not vote in its favour. On the next date itself i.e., on 10.07.2018, the

Respondent No. 3 made changes in the earlier Resolution Plan and

modified the Resolution Plan, offering certain select Financial Creditors

disproportionately admitted claims and pro-rata entitlement. Again the

same was placed before the 13th CoC meeting on 22.06.2018 but it was

not approved. Finally, in 20th CoC meeting which was held on 10.12.2018,

the Appellant again objected the discrimination in the Resolution Plan and

sought independent legal opinion on its legality. However, such suggestion

was disregarded by the Resolution Professional and other Members of

COC. The Minutes of 20th CoC meeting evidenced that the Resolution

Professional breached the statutory obligation under Section 30(2) of IBC

as it failed to provide priority to the Secured Creditors in the Resolution

Plan, in compliance of IBC and bypassing such duty on to the CoC, thus

failed to verify and confirm whether the Resolution Plan is in compliance

of Section 30(2) of IBC and thereby committed serious error. Moreover, on

06.12.2018 and 12.12.2018, the Appellant addressed letters to the

Resolution Professional reiterating apprehension against the legality of the

Resolution Plan being discriminatory and contrary of law, but this 16

Company Appeal (AT)(Insolvency) No. 553 of 2019

objection was not taken into consideration but approved the Resolution

Plan in 20th CoC meeting.

23. Admittedly, the Appellant did not challenge the approved

Resolution Plan before this Appellate Authority invoking Section 61 of IBC.

The Appellant again invented a devise under Section 60(5) IBC to challenge

approved plan by COC and Adjudicating Authority, circumventing law

without any basis.

24. It is undoubtedly clear that the Appellant did not vote in favour of

the Resolution Plan but it was approved by a majority of 81.39 % by the

CoC and the same was approved by the Adjudicating Authority vide order

dated 09.05.2019 passed in I.A. No. 24/2019 in Company Petition (IB) No.

41/7/HDB/2017. The approval of the Resolution Plan was not challenged

on any count by the Appellant-IDBI as on date, but, circumventing the

law, invented a devise, filed an Application under Section 60(5) of IBC to

pass appropriate order without assailing the approved Resolution Plan,

contending that the Resolution Plan dated 11.12.2018 is discriminatory

and not in compliance with the provisions of IBC. The Adjudicating

Authority rejected the claim of the Appellant on various grounds.

25. Once the Resolution Plan was approved by CoC and thereafter by

Adjudicating Authority, the same cannot be withdrawn or modified by

inventing devise under Section 60(5) of IBC as held by Hon'ble Apex Court 17

Company Appeal (AT)(Insolvency) No. 553 of 2019

in "Committee Of Creditors Of Essar Steel India Limited vs Satish

Kumar Gupta"4 since the proceedings under IBC are time bound. In the

recent judgment of the Hon'ble Apex Court in "Ebix Singapore Private

Limited vs. Committee of Creditors of Educomp Solutions Limited

and Anr."5 the Hon'ble Supreme Court held as follows:

"that a submitted resolution plan is binding and irrevocable as between the Committee of Creditors ("CoC") and the successful resolution applicant in terms of the provisions of the Insolvency and Bankruptcy Code, 2016 ("IBC") and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. ("CIRP Regulations") and that once the resolution plan is approved by the CoC and submitted to the adjudicating authority; the successful resolution applicant cannot withdraw or modify the resolution plan"

26. Keeping in view of the law laid down by the Hon'ble Apex Court, now

we shall examine the rival contentions of the parties.

27. Admittedly, the Resolution Plan was approved by the CoC with a

majority of 81.39 %, voting which is in compliance of Section 30(2) of IBC

4 (2002) 8 SCC 531 5 Civil Appeal No. 3224 of 2020 18

Company Appeal (AT)(Insolvency) No. 553 of 2019

and later, the Resolution Plan was approved by the Adjudicating Authority,

vide order dated 09.05.2019 passed in I.A. No. 24 of 2019 in C.P.(IB) No.

41/7/HDB/2017 and attained finality, since, it was not challenged by the

Appellant herein. Though the Appellant gave dissent during 20th Meeting

of CoC and addressed letter dated 06.12.2018 and 12.12.2018, i.e.,

subsequent to approval of Resolution Plan by CoC, those letters are of no

help to the Appellant. Those letters cannot be taken into consideration

when the plan was approved by CoC and Adjudicating Authority. In case,

any error or illegality is found, it is the duty of the Adjudicating Authority

to send back Resolution Plan for reconsideration by CoC. But no illegality

or contravention of provisions of IBC was found by Adjudicating Authority

and as such approved the Resolution Plan.

28. If for any reason, I.A. No. 24 of 2019 in C.P.(IB) No. 41/7/HDB/2017

is allowed, it amounts to setting aside the Resolution Plan indirectly or

modification of the plan directly. Therefore, filing of such Application

under Section 60(5) is nothing but an abuse of process of law and it cannot

be a devise to delay the proceeding under IBC. When the Resolution Plan

is approved and attained finality, the same cannot be altered or modified

or withdrawn in view of the law declared in "Ebix Singapore Private

Limited vs. Committee of Creditors of Educomp Solutions Limited

and Anr." referred supra. Keeping in view the law laid down by the Hon'ble

Apex Court, we have no hesitation to hold that the Appellant is not entitled 19

Company Appeal (AT)(Insolvency) No. 553 of 2019

to claim any relief in the present Appeal as the Resolution Plan was already

approved and attained finality. On this ground alone, the Appeal is liable

to be dismissed. Accordingly, the point is held against the Appellant and

in favour of the Respondents.

POINT NO. 2:

29. One of the main contentions of the Appellant is that the Appellant

did not agree with the approval of the Resolution Plan in the CoC and

raised certain objections both in 12th and 20th CoC meetings, still

Resolution Plan was approved by the CoC. Even after approval, the

Appellant addressed letters on 06.12.2018 and 12.12.2018 to Resolution

Professional raising a contention of discriminatory treatment of the

Appellant in payment of proportionate share etc. Thus, it is clear from the

allegations made in the Grounds of Appeal and in the contentions raised

before the Adjudicating Authority, the Appellant is a dissenting Creditor,

admittedly. The Hon'ble Apex Court in "Indian Resurgence ARC Private

Limited v. M/s Amit Metaliks Limited & Anr."6 held that a dissenting

secured creditor cannot challenge an approved Resolution Plan in IBC and

insist for payment of higher amount to it on the basis of security interest

held by it over the Corporate Debtor. It was further held that in the scheme

of IBC, every dissatisfaction does not partake the character of a legal

grievance and cannot be taken up as a ground of appeal.

6 Civil Appeal No. 1700 of 2021, (2020) 8 SCC 53 20

Company Appeal (AT)(Insolvency) No. 553 of 2019

30. In another judgement "Jaypee Kensington Boulevard

Apartments Welfare Association and Others v. NBCC (India) Limited

and others"7 the Hon'ble Apex Court made it clear that a dissenting

financial creditor would receive the payment of the amount as per his

entitlement, and that the entitlement could also be satisfied by allowing

him to enforce the security interest, to the extent of the value receivable

by him. It had never been laid down that if a dissenting financial creditor

had security available with him, he would be entitled to enforce the entire

security interest or to receive the entire value of the security available with

him. His dealing with the security interest would be conditioned by the

extent of value receivable by him. It was held by the Hon'ble Supreme

Court that the financial proposal in the Resolution Plan forms the core of

the business decision of the CoC.

31. In view of the principle laid down in the above two judgments, when

the Appellant is dissenting Creditor, Appellant is not competent to

challenge the approved Resolution Plan and file an Appeal under Section

61 of IBC before this Tribunal. Applying the principle laid down in the

above judgments, we hold that the Appellant being a dissenting secured

Financial Creditor is not entitled to challenge Resolution Plan on the

ground of discrimination by filing separate Interlocutory Application

7 Civil Appeal No. 3395 of 2020, (2022) 1 SCC 401 21

Company Appeal (AT)(Insolvency) No. 553 of 2019

without challenging the approved Resolution Plan. Accordingly, the point

is held against the Appellant and in favour of the Respondent.

POINT NO. 3:

32. One of the contentions of the Counsel for the Appellant is that no

priority was given for payment of debt, though, the security interest

created in its favour is more valuable and no security interest was created

in favour of Canara Bank, whereas, Mr. Dhruv Mehta, learned Sr. Counsel

for Respondent No. 3 and learned Sr. Counsel, Shri Dutta contended that

once, the Resolution Plan is approved by CoC and by the Adjudicating

Authority recording its satisfaction of compliance of Section 30(2)(4) in an

Application filed under Section 31 of IBC it can't be set aside. At best the

duty of the Resolution Professional is to follow the procedures prescribed

under Section 30(2) IBC. According to Section 30(2) of IBC, the Resolution

Professional shall examine each Resolution Plan received by him to

confirm that each Resolution Plan provides for 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, 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 the amount to be paid

to such creditors in the event of a liquidation of the Corporate Debtor

under Section 53 or the amount that would have been paid to such

Creditors, if the amount to be distributed under the resolution plan had 22

Company Appeal (AT)(Insolvency) No. 553 of 2019

been distributed in accordance with the order of priority in sub-section (1)

of section 53. The explanations 1 & 2 annexed to it clarifies that a

distribution in accordance with the provisions of this clause shall be fair

and equitable to such Creditors. According to sub-clause 4, the CoC may

approve the Resolution Plan by voting not less than 66% of voting share of

the financial Creditor after considering its feasibility and viability, the

manner of distribution proposed, which may take into consideration, the

order of priority amongst the Creditors as laid down under Section 53(1)

including the priority and value of security interest of the secured

Creditors and such other requirements as may be specified by the Board.

33. In the instant case, Resolution Professional examined the Resolution

Plan received, on the touch stone of Section 30(2), placed before the CoC,

after satisfying itself about compliance of Section 30(4), approved the

Resolution Plan. Thereupon, the Resolution Professional filed Application

I.A. No. 24/2019 in C.P.(IB) No. 41/7/HDB/2017 under Section 31 of IBC

for approval of the Resolution Plan. The Resolution Plan was approved by

Adjudicating Authority with a rider. Though the approval is subject to the

outcome of result of I.A. No. 155 of 2018, since, the Plan is not under

challenge, this Tribunal need not examine the legality of the order passed

in I.A. No. 24/2019.

34. Viewed from any angle, the Resolution Plan was approved by CoC

and Adjudicating Authority, as the Plan satisfied the legal requirement 23

Company Appeal (AT)(Insolvency) No. 553 of 2019

under IBC. The main endavour of Mr. Dhruv Mehta, learned Sr. Counsel

for the Respondent No. 3 is that when CoC approved the Resolution Plan

taking a commercial decision, the same cannot be challenged by way of an

Appeal and drawn attention of this Tribunal the judgment in "Committee

Of Creditors Of Essar Steel India Limited vs Satish Kumar Gupta"

referred supra wherein the Hon'ble Supreme Court held that it was beyond

shadow of doubt that approval of the Resolution Plan fell within the

domain of commercial wisdom of CoC and the scope of judicial review was

limited to the four corners of Section 30(2) and 61(3) of IBC. In another

judgment "Jaypee Kensington Boulevard Apartments Welfare

Association and Others v. NBCC (India) Limited and others" reiterated

the same principle. In case of "K. Sashidhar Vs. Indian Overseas Bank

& Ors." and "Maharashtra Seamless Ltd. V. Pandmanabhan

Venkatesh & Ors."8 expressed the same view by Hon'ble Apex Court.

35. In "Pratap Technocrates (P) Ltd. vs. Monitoring Committee of

Reliance Infratel Ltd".9 held that jurisdiction of Adjudicating Authority

cannot extend into entering upon merits of a business decision made by a

requisite majority of the CoC in its commercial wisdom. Under the Indian

insolvency regime, it appears that a conscious choice has been made by

8 CIVIL APPEAL NOS. 4967-4968 OF 2019 9 Civil Appeal No 676 of 2021 (2021) 10 SCC 623 24

Company Appeal (AT)(Insolvency) No. 553 of 2019

the legislature to not confer any independent equity-based jurisdiction on

the Adjudicating Authority other than the statutory requirements laid

down under Section 30(2) of the IBC.

36. In the Judgment "Ebix Singapore Private Limited vs. Committee

of Creditors of Educomp Solutions Limited and Anr." held, in a

commercial decision taken by CoC, while accepting the Resolution Plan by

their commercial wisdom, it cannot be interfered.

37. The commercial wisdom of CoC is supreme all safeguards are

provided to such commercial decision vide "Vallal RCK Vs. Siva

Industries Ltd"10 dated 03.06.2002.

38. On overall consideration of law laid down in various judgments

referred above, it is clear that this Tribunal does not have power of judicial

review, when the decision taken by CoC in compliance of Section 30(2) and

Regulations 37 & 38 of Insolvency and Bankruptcy Board of India

(Insolvency Resolution Process for Corporate Persons) Regulations 2016.

Even this Tribunal is also not entitled to interfere with such decision,

except where the approved Resolution Plan is contrary to the provision of

IBC or any other law which would fall within Section 61(3) of IBC. But here

the approved Resolution Plan is not under challenge before this Tribunal

but an order dated 9th May, 2019 passed in I.A. No. 24 of 2019 in C.P.(IB)

No. 41/7/HDB/2017 is under challenge. Therefore, this Tribunal need not

10 CIVIL APPEAL NOS. 18111812 OF 2022 25

Company Appeal (AT)(Insolvency) No. 553 of 2019

advert to the findings recorded in the order under Section 31 of IBC, by

the Adjudicating Authority which attained finality long ago. Moreover, it is

evident from the material on record that the Appellant IDBI filed I.A. No.

24 of 2019 in C.P.(IB) No. 41/7/HDB/2017 circumventing the law to get

appropriate relief but the very filing of such Application is nothing but an

abuse of process of law. Therefore, we find no merit in the contentions of

learned Senior Counsel for the Appellant and the appeal is devoid of

merits. Consequently, the Appeal is liable to be dismissed.

39. In view of the foregoing discussions, we find no grounds warranting

interference with the order under challenge passed by the Adjudicating

Authority dated 9th May, 2019 passed in I.A. No. 24 of 2019 in C.P.(IB) No.

41/7/HDB/2017 and the Appeal is liable to be dismissed.

40. In the result Appeal is dismissed, confirming the order passed in I.A.

No. 24 of 2019 in C.P.(IB) No. 41/7/HDB/2017 dated 19th May, 2019.

[Justice Ashok Bhushan] Chairperson

[Justice M. Satyanarayana Murthy] Member (Judicial)

[Barun Mitra] Member (Technical)

NEW DELHI Akc