In the matter of Galada Power and Telecommunications Ltd.

[PER: BENCH] ORDER I. This application is filed on behalf of the Resolution Applicant under Section 60(5) of IBC, 2016 r/w Rule 11 of NCLT Rules, 2016 seeking to – (a) direct the Respondent Nos.1 to 5 to revoke their decision to approve the Resolution Plan submitted by the Respondent No.6/M/s. Amrutha Constructions Pvt. Ltd, and accept the Resolution Plan submitted by the Applicant herein, M/s.Jiva Internet Solutions Pvt. Ltd. forthwith; and (b) direct the respondent No.1 (Resolution Professional) to do all acts and deeds to give effect to the prayer at (a) above.

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

II. Briefly, the facts as mentioned in the Application are as follows:

a. The Company Petition CP(IB) No.384/7/HDB/2018 filed by the Stressed Assets Stabilization Fund, for short ‘Respondent No.2/Financial Creditor’ against the Corporate Debtor/M/s. Galada Power and Telecommunication Ltd. was admitted into CIRP by this Adjudicating Authority, vide Order dated 14.08.2019 and appointed Mr. Nitin Panchal as the Interim Resolution Professional, for short ‘IRP’. A copy of the Order is filed as Annexure-A1 of the application.

b. The IRP issued an invitation for ‘Expression of Interest’ for short ‘EOI’ dated 17.06.2021 in Form G (Annexure-A2) inviting the Expression of Interest from the Prospective Resolution Applicants. In response, the Applicant Company has submitted its Financial Proposal and Resolution Plan dated 04.09.2021 for an amount of Rs.39,87,26,575/-. Copies of the same are filed as Annexures-A3 & A4 of the application.

c. It is averred that the RP has shortlisted three (3) Resolution Applicants out of nine (9) Resolution Applicants and though the Applicant Company submitted Resolution Plan with an higher amount to be paid to CoC Members and to Workmen

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 and scored better in quantitative as 80.0, the CoC has selected Respondent No.6 Company, M/s. Amrutha Constructions Pvt. Ltd. through its e-voting, which concluded on 17.09.2021 and the Evaluation Matrix (Annexure-6 & 7).

d. The Applicant proposed to engage a veteran Mr. Gogineni Satyanarayana as Chief Technical Consultant, who has wide experience in the relevant industry, but RP/CoC ignored the same.

e. It is averred that based on the email dated 23.09.2021 received from RP stating that the Resolution Plan submitted by the Applicant Company has not been approved by the CoC members with requisite majority and the EMD will be refunded within 30 days, the Applicant Company has sent a protest email dated 24.09.2021 and reserved its right to approach this Hon’ble Tribunal in the interest of equity and justice and to ensure the value maximization of all stakeholders. A copy of the same is filed as Annexure- A10 of the application.

f. It is submitted that the statutory provisions contained in Section 30(2) mandates that “the Resolution Professional shall examine each Resolution Plan, so that the same shall

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 provide for higher payment of debts to operational creditors and financial creditors and it is clearly states that “for the removal of debts, it is hereby clarified that a distribution in accordance with the provisions of this Clause shall be fair and equitable to such creditors. Therefore, the above said provision clearly favours the Resolution Plan submitted by the Applicant Company who has offered higher amount not only to the Financial Creditors but also to other creditors and scored much higher in quantitative matrix.

g. Since the decision of the CoC in this matter is clearly opposed the statutory provisions and this Tribunal only can adjudicate the matter, this application is filed in the interest of justice and also to uphold the majesty of Rule of Law laid down in the IBC, 2016 u/s 30(2).

III. The gist of the Counter filed by the Respondent No.1 is - a. After assessment of the Resolution Plans, based on the merits, three(3) Resolution Plans were submitted to CoC and the CoC has approved the Resolution Plan of M/s. Amrutha Constructions Private Ltd based on the highest score at the 25th CoC meeting held on 07.09.2021 through e-voting which concluded on 17.09.2021 and the same was filed before this Tribunal.

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 b. The Evaluation Matrix was unanimously approved by the CoC Members in its 20th Meeting held on 02.07.2021 through ballot voting and the same was shared with the Applicant along with the RFRP and Information Memorandum on 07.07.2021 after receipt of duly executed Non-Disclosure Agreement. The Evaluation Matrix clearly defined the Qualitative and Quantitative parameters with corresponding marks assigned to them.

c. Ample time was given to all the Resolution Applicants at every stage of the process to submit their offers and conducted open biddings virtually in the 24th CoC meeting held on 31.08.2021 and 02.09.2021 to ensure the entire process in a competitive, fair and transparent manner by inviting all the 3 Resolution Applicants to participate. The bidding process was concluded only after obtaining verbal confirmation from all the Resolution Applicants confirming the submissions of their final bid/offer.

d. On the above grounds, the Respondent seeks to dismiss the instant application.

IV. The Respondent Nos.2 and 3 submitted their reply on the same lines of the submissions made by the Respondent No.1.

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

V. The gist of the Rejoinder is - a. The Respondent No.1 filed merely taking shelter of commercial wisdom of CoC, which is not apparent on records and only furnished evasive and vague replies. Further, the Respondent No.1 wilfully suppressed filing of crucial documents viz. trail of emails dated 2nd, 3rd & 4th September, 2021 and documents exchanged therewith and the Minutes of 25th meeting of CoC held on 07.09.2021. Copies of the same are filed as Annexure-AA1 & AA2 of the application, which clearly expose the nexus between the alleged Successful Resolution Applicant i.e. Respondent No.6.

b. The approval of CoC clearly violated the basic principles of IBC, 2016 and more so, the statutory provisions contained u/s 30(2) of IBC, 2016 and it is clear case of subjective and colluded approval for the alleged Resolution Application of Respondent No.6 on the part of CoC.

c. It is a clear case of failure on the part of the Resolution Professional and the Committee of Creditors, who failed to exercise independent commercial wisdom, unbiased and fair consideration of the best opportunity available for the resolution process. Hence, the Application filed by this Unsuccessful Resolution Applicant deserves to be NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 considered favourably in the interest of upholding the purpose and intent of Resolution Process under IBC, 2016.

VI. The Resolution Professional filed a Memo dated 29.11.2022 stating that – i. The Hon’ble Bench directed the Respondents/Resolution Professional to file a Memo in respect of the Evaluation Matrix parameters contained in B2 and B3 and scores awarded by the Committee of Creditors thereunder. In compliance of the directions of the Adjudicating Authority, the Respondents/Resolution Professional submitted the following details:

a) The RP prepared Evaluation Matrix on 05.07.2021 which was duly approved by CoC and the same was shared with the Prospective Resolution Applicants (PRAs) on 07.07.2021 immediately after obtaining the Non- Disclosure Agreement from PRAs. Thereafter, all the Resolution Plans submitted by the interested Resolution Applicants were evaluated, assessed and finalized in accordance with the said Evaluation Matrix.

b) The Evaluation Matrix scores were awarded to the Applicant herein on B2 & B3 parameters under the NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

Qualitative Criteria of the said Evaluation Matrix and are as follows:

B1 - scores will be based reasonableness of financial projections, mitigation factors related to the implementation of the proposed Resolution Plan.

B2 - score will be given based on ability to turnaround distressed companies – Managerial competence and technical abilities, key managerial personnel, track record in implementing turnaround of stressed assets etc. This parameter is further sub-divided as under:

a. Track record / Experience of the Resolution Applicant (3 marks).

b. Track record in M&A / taking over and turning around distressed assets (2 marks).

B3 - score will be given based on “core competence” in the same line of Business activity of the Corporate Debtor (5 marks). Full marks would be awarded in case the Resolution Applicant has core competence in the same line of business activity of the Corporate Debtor.

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 ii. In accordance with the approved Evaluation Matrix, scores were awarded to the respective Resolution Applicants including Applicant herein by the CoC.

iii. The observations laid down by the CoC while awarding scores to the respective Resolution Applicants are mentioned at Page No.2 of the Memo dated 29.11.2022 filed by the Resolution Professional, which are as below:

A. The Resolution Professional prepared Evaluation Matrix on July 5th, 2021 which was duly approved by CoC. This Evaluation Matrix was shared with the Prospective Resolution Applicants (PRAs) on July 7th, 2021 immediately after obtaining the Non-Disclosure Agreement from the PRAs. Thereafter, all the Resolution Plans submitted by the interested Resolution Applicants were evaluated, accessed and finalized in accordance with the said Evaluation Matrix.

B. In accordance with the evaluation matrix, scores were awarded to the Applicant herein on B2 & B3 parameters under the Qualitative Criteria of the said Evaluation Matrix. It is submitted that in accordance with the Evaluation Matrix parameter mentioned below:-

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

 B1 – Scores will be based reasonableness of financial projections, mitigation factors related to the implementation of the proposed Resolution Plan.  B2 – Score will be given based on ability to turnaround distressed companies – Managerial competence and technical abilities, key managerial personnel, track record in implementing turnaround of stressed assets, etc. This parameter is further sub-divided as under: a. Track record / Experience of the Resolution Applicant (3 marks) b. Track record in M&A / taking over and turning around distressed assets (2 marks)  B2 – Score will be given based on “core competence” in the same line of Business activity of the Corporate Debtor (5 marks). Full marks would be awarded in case the Resolution Applicant has core competence in the same line of business activity of the Corporate Debtor. C. In accordance with the approved Evaluation Matrix, scores were awarded to the respective Resolution Applicants including Applicant herein by the Committee of Creditors hereinafter referred to as “CoC”. It is pertinent to mention the observations laid down by the CoC while awarding scores to the respective Resolution Applicants.

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

Parameter Total RA1 M/s Amrutha RA2 Consortium of M/s Qualitative Marks Score Constructions Score Jiva Internet Private Ltd (RA1) Solutions Pvt Ltd, Mr. Vanit Kumar & Mrs. Vanisha Agarwal (RA2) B1 10.00 10.00 The net worth of 8.00 The total net worth the Successful of RA2 as on Resolution 31.03.2020 as per Applicant i.e. M/s the data submitted Amrutha with the resolution Construction Professional is Rs. Private Limited as 26.94 Crores. Like on 31.03.2021 is in the case of RA1, Rs.265.38 RA2 has also not Crores. Based on provided its balance the sheet, Financial data/documents Projections in submitted by support of the each of the Economic Viability, Resolution External Credit Applicants, the Rating in support of RP/COC found their Financial that the net worth Strength. In the of the successful absence of any such resolution documents, the applicant is COC was no able to almost 10 times assess the financial more than the position of RA2. other resolution However, it was applicants. The very clear that the COC was of the net worth of RA2 view that on the was very low when strength of its net compared with the worth, the net worth of RA1. successful Basis the limited resolution financial data made applicant will available, marks have much better were allocated to access to avenues RA2. that are available for fund raising in the medium as well as in the long

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 run. The business from PSUs is mainly procured through Bidding / Tendering process. As the net worth is one of the essential criteria for Tendering / Bidding Qualification, the COC was of the view that the successful resolution applicant will have better standing for sourcing the future business to ensure revenue visibility in the short term as well as in long run. Copy of Rating Rationale by Brickwork is annexed herewith as Annexure – 1. That, the successful resolution applicant has also provided its provisional balance sheet as on 31.03.2021, Financial Projections in support of the Economic

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

Viability, External Credit Rating of Brickworks in support of their Financial Strength. The operations of the Corporate Debtor have been shut down since the year 2019. The COC was of the unanimous view that a huge investment will be required to revive the business of the Corporate Debtor and only an entity with a sound financial background and a strong balance sheet will be able to make an heavy investment into the corporate debtor. On this count, it was evident from the data presented before the COC that the net worth/financial position of the successful resolution applicant was much higher than the other resolution

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 applicants and accordingly marks were allotted by the COC. B2 A 3.00 2.50 The major source 0.00 On the other hand of demand for the RA2, the Applicant conductors is herein has no with various industry/ sector Public Sector specific track record Undertakings which is more and RA1, the pertinently required successful for successful Resolution revival of this Applicant has Corporate Debtor been associated and without with various PSU existing in-house clients for many talent on the board years. The COC of the Corporate was of the view Debtor, the RA2 that this may face entry association will barriers to various also help them to prospective PSU’s support growth which will opportunities ultimately impact with secured revenue projections revenue growth in of the Corporate the medium to Debtor in the long long term growth run. It is also opportunities of submitted that the Corporate these constraints as Debtor. mentioned above The Successful are also coupled Resolution with no prior Applicant has in experience of house talent and Aluminium in the opinion of industry which may the COC, RA1 has pose challenges to far better scale up the capabilities to operations in order revive the to revive the business of the Corporate Debtor. Corporate Debtor

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 as compared to RA2. Mr. P.V. Rao (MD of RA1) & Mr. L. Thiyagarajan, proposed members of the Board have rich experience in the Aluminium industry. B2 B 2.00 0.00 Since RA1 has no 0.00 Since RA2 has no experience in experience in turning around turning around distressed assets, distressed assets, no mark have no marks have been been awarded for awarded for this this parameter. parameter B3 5.00 3.50 RA1, the 0.00 Whereas RA2, the Successful Applicant herein Resolution proposes to have Applicant has in Mr. Vanit Kumar & house talent and Mrs. Vanisha have far better Agarwal as capabilities to proposed directors. revive Corporate Both of them are Debtor as from IT Sector and compared to RA2. have absolutely no That Mr. P.V. Rao industry specific the Managing knowledge & Director of RA1 experience in the who immediately line of activity of the after graduation Corporate Debtor. in the Year 1984 Copy of worked as IA No 663 is Management annexed herewith Trainee for a as Annexure – 4. period of one year Thereafter in company Applicant herein called Mohan has stated that they Aluminium are in the process of Private Ltd identifying the team Bangalore who of professionals to were one of the maintain

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 leading operational Manufacturers of oversight. Copy of AAC & ACSR 54 of IA No 663 is Conductors as annexed herewith well as of as Annexure – 5. Aluminium Rods. The COC requested Copy of Page 9 RA2 to submit of the concluded Tie Up or Resolution Plan Mandate Signed in is annexed respect of the talent herewith as acquisition in this Annexure – 2. regard. No such That Successful document was Resolution made available to Applicant has CoC by the identified Mr. L. Applicant herein at Thiyagarajan as the time of member of the Evaluation. proposed Board Applicant herein as Directors, sought additional Head of time for this & that Operations and was objected by will be in charge RA1 (Successful of day to day Resolution operations Applicant) as it was management of made clear by CoC the Corporate that no further Debtor. He has extension is over 25 years of permissible as experience in the entire Second Aluminium Round of EOI was Industry and has conducted within worked with exclusion period of Global MNCs in 106 days as the middle east permitted by and currently Hon’ble NCLT associated with one of the leading Aluminium Rod & ACSR Conductor Manufacturer in India. Copy of Page 35 of the NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

Resolution Plan is annexed herewith as Annexure – 3. Further RA1 has participated in a PGCIL tender for construction of 33KV and 11KV lines in the state of Arunachal Pradesh valuing around Rs. 200 crore which involved substantial procurement of aluminium conductors (Pg. No. 9 of the Resolution Plan). Acquisition of the Corporate Debtor may also be treated as backward integration for the RA.

D. Thus, on the date of Evaluation, the COC based on the information provided, explanations given and the documents submitted before them, was of the view that M/s. Amrutha Constructions Private Limited was having stronger Financial strength as well as in house Talent required for revival of the Corporate Debtor post its acquisition under IBC whereas this essential & pertinent requirement was lacking in case of RA2, the Applicant herein as they do not have any core competence

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 in this line of activity of the Corporate Debtor. Therefore, the 6th Respondent is on a higher footing in comparison to the Applicant herein in accordance with the above mentioned detailed analysis and evaluations conducted by the COC on the basis of approved evaluation matric annexed herewith. It is stated that the Successful Resolution Applicant can make the operations more cost effective and the existing in house talent will help in a long way to revive the Corporate Debtor. On both counts i.e. financial strength and experience in the aluminium industry, the COC found that RA1 was on a much better footing as compared to RA2 for the reasons mentioned above. The COC was also conscious of the fact that Insolvency and Bankruptcy Code has provided a platform for turning around distressed companies by way of resolution. Thus the intent of the CIRP process is finding a resolution and it is not any other recovery mechanism. Keeping in mind the purpose of the code, the COC after taking into account all the factors mainly financial strength and experience in the aluminium industry assessed the capabilities of both RA1 and RA2 and allocated marks. On the basis of these factors alone COC has allotted marks to the respective Resolution Applicants.

VII. Both the parties have submitted their written submissions.

VIII. In the light of the contest, as afore stated, we have framed the following Point for our consideration –

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

Can the Adjudicating Authority direct the COC to revoke its acceptance accorded to a Resolution Plan or to accept the Resolution Plan which it has rejected? IX. We have heard the Learned Counsel Dr.S.V.Ramakrishna for Mr.S.V.Vanshi Krishna, Advocate, for Applicant, Mr. V.V.S.N. Raju, Advocate for 1stRespondent, Mr. Raja Shekar Rao Salvaji, Advocate for the Respondents 2&3, perused the record and case law.

X. Point.

Can the Adjudicating Authority direct the COC to revoke its acceptance accorded to a Resolution Plan or to accept the Resolution Plan which it has rejected?

i. The decision of the COC rejecting the Resolution Plan of the Applicant and acceptance of the Resolution Plan of the 6th Respondent appears to be the genesis for filing the present application. According to the Learned Counsel for the Applicant, the COC’s decision of approving the Resolution Plan of the 6th Respondent and rejection of the Resolution Plan of the Applicant, does not reflect the ‘real commercial wisdom’ of COC, besides violative of the provisions of the IBC, as such, the said decision needs to be set aside.

ii. Learned Counsel further contends that even though the Resolution Plan of the Applicant provides larger sum than the Plan submitted by the 6th Respondent, besides

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 the Applicant scored more marks than the 6th Respondent in the qualitative parameters, only by manipulating the qualitative parameters and playing fraud by RP and COC, the 6th Respondent was given the score of 16 out of 20 points whereas the Applicant was given only 8 out of 20 points and basing on the qualitative parameters thus arrived at, the Resolution Plan of the 6th Respondent has been voted favourably and the resolution Plan of the Applicant has been rejected. Therefore, according to the Learned Counsel, the above decision of the COC does not reflect the ‘real commercial wisdom’ of COC, as such the same needs to be substituted with the judicial wisdom, by setting aside the said decision.

iii. Thus, the process of Evaluation Matrix followed by the COC is the subject matter of challenge, in this application iv. The law as regards interference in the decision of the CoC, be it acceptance or rejection of a Resolution Plan of a Prospective Resolution Applicant (PRA), or the process of Evaluation Matrix followed by the members of the CoC, is well settled and no longer res integra.

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 v. (i). Hon’ble NCLAT in IMR Metallurgical Resources AG v. Ferro Alloys Corporation Limited [(Company Appeal) (AT) No. 272 of 2020] wherein the appellant challenged the Evaluation Matrix, held that – “12. In this Appeal, the Appellant had challenged the Evaluation Matrix approved by the CoC which falls within the commercial wisdom of the CoC. It is settled position of law that approval or rejection of Resolution Plan depends upon the commercial wisdom of the CoC, which involves evaluation of the Resolution Plan based on its feasibility. Such commercial wisdom of the CoC with the requisite voting majority is non-justiciable. The powers of the Adjudicating Authority under Section 31 of the Code is limited to the matters covered under Section 30(2) of the Code when the Resolution Plan does not conform to the stated condition. Therefore, the Appellant cannot question the commercial wisdom of the CoC in rejecting the Resolution Plan, with the requisite majority and in approving the Resolution Plan of SPTL. No material irregularity in Corporate Insolvency Resolution Process before the R.P. has been demonstrated.” (ii). A Civil Appeal No. 2720 of 2020 before the Hon’ble Supreme Court against the aforesaid Judgment was dismissed by the Hon’ble Supreme Court vide its Order dated 20th July 2020.

vi. Hon’ble Supreme Court of India, in Maharashtra Seamless Limited vs Padmanabhan Venkatesh, Civil Appeal No 4242/2019 decided on 22 January, 2020, in para 28 held as follows: “8. The Appellate Authority has, in our opinion, proceeded on equitable perception rather than commercial wisdom. On the face of it, release of assets at a value 20% below its liquidation value arrived at by the valuers seems inequitable. Here, we feel the Court ought to NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 cede ground to the commercial wisdom of the creditors rather than assess the Resolution Plan on the basis of quantitative analysis. Such is the scheme of the Code. Section 31(1) of the Code lays down in clear terms that for final approval of a resolution plan, the Adjudicating Authority has to be satisfied that the requirement of sub-section (2) of Section 30 of the Code has been complied with. The proviso to Section 31(1) of the Code stipulates the other point on which an Adjudicating Authority has to be satisfied. That factor is that the resolution plan has provisions for its implementation. The scope of interference by the Adjudicating Authority in limited judicial review has been laid down in the case of Essar Steel (supra), the relevant passage (para 54) of which we have reproduced in earlier part of this judgment. The case of MSL in their appeal is that they want to run the company and infuse more funds. In such circumstances, we do not think the Appellate Authority ought to have interfered with the order of the Adjudicating Authority in directing the successful Resolution Applicant to enhance their fund inflow upfront. (Emphasis is ours).

vii. Hon’ble Supreme Court, in re., ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta and Ors., (2019) 2 SCC 1, similarly held that – “That apart, the challenge of the Applicant being process of Evaluation Matrix which is entirely the domain of the COC cannot be interfered by this Adjudicating Authority” Hon’ble NCLAT in the matter of PNC Infratech Limited v. Deepak Maini and Others, Company Appeal (AT) No. 143 of 2020 whereunder the facts were same as the present Application, had held that “29. From the minutes of the 9th CoC, this Tribunal is of the view that the letter of the Appellant dated 25.07.2019 regarding revision of plan, has also been considered in the said meeting and thereafter the CoC evaluated the plan and provided the score matrix at page 210 of Appeal paper book, Vol.-I. 30. On the other hand, the Learned Counsel for the Appellant contends that the evaluation of matrix adopted by the CoC is not in accordance with the law and submitted that the NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

Appellant should have been declared as Successful Resolution Applicant whereas the Appellant was treated as H2 bidder. Before adverting to the finding, the relevant provision of law is extracted hereunder for beneficial reference. 38. In view of the decisions of the Hon’ble Supreme Court, it is the settled proposition of law that the commercial wisdom of the Committee of Creditors in approving or rejecting a resolution plan is essentially based on a business decision which involves evaluation of resolution plan based on its feasibility besides the Committee of Creditors being fully informed about the viability of the Corporate Debtor. The Committee of Creditors invariably examine the Resolution Plan and an assessment is made through their team of experts in that regard. 39. Further, there is no such mechanism under the Code that gives the right to the Unsuccessful Resolution Applicant to challenge the score granted as per the evaluation matrix prepared by the CoC and the Resolution Professional as per the provisions of CIRP Regulations. Though, Section 61 of the Code provides Appeals against the orders of the Adjudicating Authority and Sub-section (3) thereof provides an Appeal against an order approving a Resolution Plan under Section 31 which may be filed on the following grounds namely:..” XI. Therefore, when there is no mechanism under the Code that gives the right to the Unsuccessful Resolution Applicant to challenge the score granted as per the evaluation matrix prepared by the CoC and the Resolution Professional as per the provisions of CIRP Regulations, the applicant’s challenge being in respect of the qualitative parameters adopted by the COC, whatever may the grounds is not justiciable before this Adjudicating Authority, as this Adjudicating Authority shall cede ground to the commercial wisdom of the creditors rather than venture to assess the resolution plan of the applicant on NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 the basis of quantitative analysis, whatever may be the grounds urged.

XII. Even on the factual aspect of the matter, the Memo dated 29.11.2022 filed by the Resolution Professional contends which are not in dispute demolishes the plea of collusion or fraud pleaded by the Applicant.

a) As can be seen from the said Memo, the Resolution Professional prepared Evaluation Matrix on July 5th, 2021 which was duly approved by the CoC. This Evaluation Matrix was shared with the Prospective Resolution Applicants (PRAs) on July 7th, 2021 immediately after obtaining the Non-Disclosure Agreement from the PRAs. Thereafter, all the Resolution Plans submitted by the interested Resolution Applicants were evaluated, accessed and finalized in accordance with the said Evaluation Matrix.

b) In accordance with the Evaluation Matrix, scores were awarded to the Applicant herein on B2 & B3 parameters under the Qualitative Criteria of the said Evaluation Matrix. It is submitted that in accordance with the Evaluation Matrix parameter mentioned below:-

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

 B1 – Scores will be based reasonableness of financial projections, mitigation factors related to the implementation of the proposed Resolution Plan.  B2 – Score will be given based on ability to turnaround distressed companies – Managerial competence and technical abilities, key managerial personnel, track record in implementing turnaround of stressed assets, etc. This parameter is further sub-divided as under: a. Track record / Experience of the Resolution Applicant (3 marks) b. Track record in M&A / taking over and turning around distressed assets (2 marks)  B2 – Score will be given based on “core competence” in the same line of Business activity of the Corporate Debtor (5 marks). Full marks would be awarded in case the Resolution Applicant has core competence in the same line of business activity of the Corporate Debtor.

c) In accordance with the approved Evaluation Matrix, scores were awarded to the respective Resolution Applicants including Applicant herein by the Committee of Creditors hereinafter referred to as “CoC”. It is pertinent to mention herein the observations laid down

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 by the CoC while awarding scores to the respective Resolution Applicants.

Parameter Total RA1 M/s Amrutha RA2 Consortium of M/s Qualitative Marks Score Constructions Score Jiva Internet Private Ltd (RA1) Solutions Pvt Ltd, Mr. Vanit Kumar & Mrs. Vanisha Agarwal (RA2) B1 10.00 10.00 The net worth of 8.00 The total net the Successful worth of RA2 as Resolution on 31.03.2020 as Applicant i.e. M/s per the data Amrutha submitted with Construction the resolution Private Limited as Professional is Rs. on 31.03.2021 is 26.94 Crores. Like Rs.265.38 in the case of RA1, Crores. Based on the RA2 has also not data/documents provided its submitted by balance sheet, each of the Financial Resolution Projections in Applicants, the support of the RP/COC found Economic that the net worth Viability, External of the successful Credit Rating in resolution support of their applicant is Financial almost 10 times more than the Strength. In the other resolution absence of any applicants. The such documents, COC was of the the COC was no view that on the able to assess the strength of its net financial position worth, the of RA2. However, successful it was very clear resolution that the net worth applicant will of RA2 was very have much better

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 access to avenues low when that are available compared with for fund raising in the net worth of the medium as RA1. Basis the well as in the long limited financial run. The data made business from available, marks PSUs is mainly were allocated to procured through RA2. Bidding / Tendering process. As the net worth is one of the essential criteria for Tendering / Bidding Qualification, the COC was of the view that the successful resolution applicant will have better standing for sourcing the future business to ensure revenue visibility in the short term as well as in long run. Copy of Rating Rationale by Brickwork is annexed herewith as Annexure – 1. That, the successful resolution applicant has also provided its provisional balance sheet as NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 on 31.03.2021, Financial Projections in support of the Economic Viability, External Credit Rating of Brickworks in support of their Financial Strength. The operations of the Corporate Debtor have been shut down since the year 2019. The COC was of the unanimous view that a huge investment will be required to revive the business of the Corporate Debtor and only an entity with a sound financial background and a strong balance sheet will be able to make an heavy investment into the corporate debtor. On this count, it was evident from the data presented before the COC that the net worth/financial position of the successful

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 resolution applicant was much higher than the other resolution applicants and accordingly marks were allotted by the COC. B2 A 3.00 2.50 The major source 0.00 On the other hand of demand for the RA2, the Applicant conductors is herein has no with various industry/ sector Public Sector specific track record Undertakings which is more and RA1, the pertinently required successful for successful Resolution revival of this Applicant has Corporate Debtor been associated and without with various PSU existing in-house clients for many talent on the board years. The COC of the Corporate was of the view Debtor, the RA2 that this may face entry association will barriers to various also help them to prospective PSU’s support growth which will opportunities ultimately impact with secured revenue projections revenue growth in of the Corporate the medium to Debtor in the long long term growth run. It is also opportunities of submitted that the Corporate these constraints as Debtor. mentioned above The Successful are also coupled Resolution with no prior Applicant has in experience of house talent and Aluminium in the opinion of industry which may the COC, RA1 has pose challenges to NCLT _ Hyd.

Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 far better scale up the capabilities to operations in order revive the to revive the business of the Corporate Debtor. Corporate Debtor as compared to RA2. Mr. P.V. Rao (MD of RA1) & Mr. L. Thiyagarajan, proposed members of the Board have rich experience in the Aluminium industry. B2 B 2.00 0.00 Since RA1 has no 0.00 Since RA2 has no experience in experience in turning around turning around distressed assets, distressed assets, no mark have no marks have been been awarded for awarded for this this parameter. parameter B3 5.00 3.50 RA1, the 0.00 Whereas RA2, the Successful Applicant herein Resolution proposes to have Applicant has in Mr. Vanit Kumar & house talent and Mrs. Vanisha have far better Agarwal as capabilities to proposed directors. revive Corporate Both of them are Debtor as from IT Sector and compared to RA2. have absolutely no That Mr. P.V. Rao industry specific the Managing knowledge & Director of RA1 experience in the who immediately line of activity of the after graduation Corporate Debtor. in the Year 1984 Copy of worked as IA No 663 is Management annexed herewith Trainee for a as Annexure – 4. period of one year Thereafter in company Applicant herein NCLT _ Hyd.

Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 called Mohan has stated that they Aluminium are in the process of Private Ltd identifying the team Bangalore who of professionals to were one of the maintain leading operational Manufacturers of oversight. Copy of AAC & ACSR 54 of IA No 663 is Conductors as annexed herewith well as of as Annexure – 5. Aluminium Rods. The COC requested Copy of Page 9 RA2 to submit of the concluded Tie Up or Resolution Plan Mandate Signed in is annexed respect of the talent herewith as acquisition in this Annexure – 2. regard. No such That Successful document was Resolution made available to Applicant has CoC by the identified Mr. L. Applicant herein at Thiyagarajan as the time of member of the Evaluation. proposed Board Applicant herein as Directors, sought additional Head of time for this & that Operations and was objected by will be in charge RA1 (Successful of day to day Resolution operations Applicant) as it was management of made clear by CoC the Corporate that no further Debtor. He has extension is over 25 years of permissible as experience in the entire Second Aluminium Round of EOI was Industry and has conducted within worked with exclusion period of Global MNCs in 106 days as the middle east permitted by and currently Hon’ble NCLT associated with one of the leading

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

Aluminium Rod & ACSR Conductor Manufacturer in India. Copy of Page 35 of the Resolution Plan is annexed herewith as Annexure – 3. Further RA1 has participated in a PGCIL tender for construction of 33KV and 11KV lines in the state of Arunachal Pradesh valuing around Rs. 200 crore which involved substantial procurement of aluminium conductors (Pg. No. 9 of the Resolution Plan). Acquisition of the Corporate Debtor may also be treated as backward integration for the RA.

Thus, on the date of evaluation, the COC based on the information provided, explanations given and documents submitted before them, was of the view that M/s Amrutha Constructions Private Limited was having stronger Financial strength as well as in house Talent required for NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 revival of the Corporate Debtor post its acquisition under IBC, whereas this essential & pertinent requirement was lacking in case of RA2, the Applicant herein as they do not have any core competence in this line of activity of the Corporate Debtor. Therefore, Amrutha Constructions Private Limited is on a higher footing in comparison to the Applicant herein in accordance with the above mentioned detailed analysis and evaluations conducted by the COC on the basis of approved evaluation matric annexed herewith. The Successful Resolution Applicant can make the operations more cost effective and the existing in house talent will help in a long way to revive the Corporate Debtor. On both counts i.e. financial strength and experience in the aluminium industry, the COC found that RA1 was on a much better footing as compared to RA2 for the reasons mentioned above. The COC was also conscious of the fact that Insolvency and Bankruptcy Code has provided a platform for turning around distressed companies by way of resolution. Thus the intent of the CIRP process is finding a resolution and it is not any other recovery mechanism. Keeping in mind the purpose of the code, the COC after taking into account all the factors mainly financial strength and experience in the aluminium industry assessed the capabilities of both RA1 and RA2 and allocated marks. On NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 the basis of these factors alone COC has allotted marks to the respective Resolution Applicants.

XIII. Therefore, having carefully perused the record we find that the Evaluation Matrix process followed by the COC, which is under challenge in this application is in conformity with the criteria laid down in the Evaluation Matrix ,besides based on the merits of the information provided by the Applicant as well as the 6th Respondent in this regard, as such, the same does not call for our interference. Mere plea of fraud and collusion in the absence of specific details of fraud and collusion besides its proof, is of no avail to the applicant.

XIV. (i).As regards the next plea of the Applicant that its resolution plan provides larger sum than the Plan submitted by the 6th Respondent, as such, accepting the Resolution Plan of the 6th Respondent does not fit in the real ‘commercial wisdom’ of CoC, we wish to rely on the ruling in, Rajaputana Properties Pvt. Ltd. vs. Binani Industries Ltd. and Ors., 2018 SCC Online NCLAT 521, wherein it was held by the Hon’ble NCLAT, “that the process of approving a ‘Resolution Plan’ under the Code is not an auction process whereby the highest amount ought to be accepted. It was further observed that the quality of the Resolution Plan instead depends upon the credibility and track record of the Resolution Applicant. It was therefore observed that feasibility/ viability of a ‘Resolution Plan’ is not a NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 matter of auction so that one cannot contend that the Resolution Plan with the highest amount would be the most feasible. “3. ‘Resolution Plan’ The ‘I&B Code’ defines ‘Resolution Plan’ as a plan for insolvency resolution of the ‘Corporate Debtor’ as a going concern. It does not spell out the shape, colour and texture of ‘Resolution Plan’, which is left to imagination of stakeholders. Read with long title of the ‘I&B Code’, functionally, the ‘Resolution Plan’ must resolve insolvency (rescue a failing, but viable business); should maximise the value of assets of the ‘Corporate Debtor’, and should promote entrepreneurship, availability of credit, and balance the interests of all the stakeholders.

It is not a sale. No one is selling or buying the ‘Corporate Debtor’ through a ‘Resolution Plan’. It is resolution of the ‘Corporate Debtor’ as a going concern. One does not need a ‘Resolution Plan’ for selling the ‘Corporate Debtor’. If it were a sale, one can put it on a trading platform. Whosoever pays the highest price would get it. There is no need for voting or application of mind for approving a ‘Resolution Plan’, as it will be sold at the highest price. One would not need ‘Corporate Insolvency Resolution Process’, ‘Interim Resolution Professional’, ‘Resolution Professional’, interim finance, calm period, essential services, Committee of Creditors or ‘Resolution Applicant’ and detailed, regulated process for the purpose of sale. It is possible that under a ‘Resolution Plan’, certain rights in the ‘Corporate Debtor’, or assets and liabilities of the ‘Corporate Debtor’ are exchanged, but that is incidental.

It is not an auction. Depending on the facts and circumstances of the ‘Corporate Debtor’, ‘Resolution Applicant’ may propose a ‘Resolution Plan’ that entails change of management, technology, product portfolio or marketing strategy; acquisition or disposal of assets, undertaking or business; modification of capital structure or leverage; infusion of additional resources in cash or kind over time; etc. Each plan has a different likelihood of turnaround depending on credibility and track record of ‘Resolution Applicant’ and feasibility and viability of a ‘Resolution Plan’ are not amenable to bidding or auction. It requires application of mind by the ‘Financial Creditors’ who understand the business well.”

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023 (ii). The said Judgment of the Hon’ble NCLAT was also confirmed by the Hon’ble Supreme Court, vide its Order dated 19th November 2018 in Civil Appeal No.10998 of 2018.

XV. In so far as the other prayer to revoke the acceptance of the Resolution Plan submitted by the 6th Respondent on the basis of the allegations levelled by the applicant is concerned, we state that the same is not maintainable since, in terms of Section 31 of the Insolvency & Bankruptcy Code, 2016, the Adjudicating Authority can reject the Resolution Plan voted by the COC only if the said plan does not meet the requirements referred to in sub-section 2 of Section 30 of the Code, which is as below:

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.

NCLT _ Hyd. Bench-II I.A. No.663/2021 in CP(IB) No.384/7/HDB/2018 Date of Order: 13.03.2023

[Provided that the Adjudicating Authority shall, before passing an order for approval of Resolution Plan under this sub-section, satisfy that the Resolution Plan has provisions for its effective implementation]”. XVI. In fact, a separate application has been filed by the Resolution Professional in IA No.583/2021 seeking approval of the Resolution Plan, which is pending consideration by this Adjudicating Authority. Hence, we are not entering into any finding on the applicant’s prayer for a direction to the CoC to revoke the acceptance of the Resolution Plan submitted by the 6th Respondent.

XVII. Therefore, in the light of our discussion as afore stated, and case law referred supra, we do not find any merit in the application, as such, the same is liable to be dismissed. Accordingly, the same is hereby dismissed. No costs.

XVIII. In the result, IA 663/2021 in CP(IB) 384/7/HDB/2018 is dismissed. However, without costs.

Sd/- Sd/-

SATYA RANJAN PRASAD Dr.N.V.RAMA KRISHNA BADARINATH MEMBER (TECHNICAL) MEMBER (JUDICIAL)

VL/Syamala