Jaitnder Pal Singh Hanjra Through Its ... vs Vivek Raheja Resolution Professional ...

[Arising out of order dated 30.11.2023 passed by the Adjudicating Authority, National Company Law Tribunal, New Delhi Bench (Court- II) in IA No.3016 of 2023 in CP (IB) No. 1048 (ND)/2019]

IN THE MATTER OF:

Jaitnder Pal Singh Hanjra Through its Authorized Representative Ajay Nagpal A-104, Shivalik, Near Sumitra Hospital Sector-35, Gautam Budda Nagar, Uttar Pradesh- 201301. ...Appellant

Versus

1. Vivek Raheja Resolution Professional of J.P. Engineers Private Limited JD-2C, 2nd Floor, Pitampura, Delhi-110034. ...Respondent No. 1 2. Union Bank of India 603B, Konnectus Tower, Ajmeri Gate, Delhi. ...Respondent No. 2 3. Axis Bank 6-3-879/B, 1st Floor, D. Pullareddy Building, Greenlands, Begumpet, Hyderabad-500016. ...Respondent No. 3 4. ICICI Bank, NBCC Place, Bhishm Pitamah Marg, Pragati Vihar, New Delhi-110003. ...Respondent No. 4 5. Yes Bank 5A/15, Tilak Nagar, Near Subhash Nagar Metro Station, New Delhi-110018. ...Respondent No. 5 Present: 2

Appellant: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Kunal Godhwani, Mr. Aditya Shukla, Advocates.

For Respondents: Mr. KD Sharma, Advocate for R-1. Ms. Ekta Choudhary, Ms. Aditi Sharma, Mr. Divyank Dutt Dwivedi, Advocates for R-2. Mr. Bharat Bhushan Sethi, Advocate (I.A. No. 171 of 2024).

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

30.11.2023 (hereinafter referred to as "Impugned Order") passed by the

Adjudicating Authority (National Company Law Tribunal, New Delhi Bench,

Court- II) in IA No.3016 of 2023 in CP (IB) No. 1048 (ND)/2019 wherein the

Resolution Professional had sought extension of the CIRP period of the

Corporate Debtor by 60 days. By the impugned order, the Adjudicating

Authority while allowing the CIRP extension of 60 days also directed the

Resolution Professional to issue a fresh Form-G in the CIRP of the Corporate

Debtor which was dehors the relief prayed for. Aggrieved by the impugned

order, the present appeal has been filed by the Appellant.

2. The brief facts of the case are as outlined below: -

 The Corporate Debtor was admitted into CIRP by the Adjudicating

Authority on 26.02.2020 on a Section 9 petition filed by the Operational

Creditor.

Company Appeal (AT) (Insolvency) No. 1611 of 2023 3

 The Resolution Professional ("RP" in short) issued Form-G on 5

occasions seeking EOIs for submission of Resolution Plans. The CoC

was constituted with Union Bank of India (84.90%), Axis Bank (6.48%),

ICICI Bank (6.18%) and Yes Bank (2.44%).

 Three Resolution Plans were received. However, as none of these plans

were approved by the CoC in its 20th and 21st meetings, the RP filed I.A.

No. 3199 of 2022 seeking liquidation of the Corporate Debtor.

 While the I.A. No. 3199 of 2022 was pending before the Adjudicating

Authority, the present Appellant sent an EOI to the RP on 09.01.2023

to allow submission of Resolution Plan. The Appellant was informed by

the RP that CIRP period had ended on 18.06.2022 and that liquidation

of the Corporate Debtor was pending consideration of the Adjudicating

Authority.

 The Appellant filed I.A. No. 228 of 2023 before the Adjudicating

Authority seeking permission to submit Resolution Plan. The

Adjudicating Authority allowed the Appellant to submit Resolution Plan

vide its order dated 16.01.2023. The Appellant submitted the

Resolution Plan before the RP on 30.01.2023.

 On 04.02.2023, the RP had filed I.A. No. 886 of 2023 seeking

rectification of the order dated 16.01.2023 of the Adjudicating Authority

passed in I.A. No. 228 of 2023 which had wrongly recorded that no EOI

proposal had been received, whereas in actuality, 03 Resolution Plans

had been received which were all rejected by the CoC.

Company Appeal (AT) (Insolvency) No. 1611 of 2023 4

 The Adjudicating Authority instead of rectifying its order dated

16.01.2023 decided to recall the said order on 08.02.2023 on the

ground that the factual backdrop espoused by the parties never existed.

 The Appellant challenged the order of the Adjudicating Authority dated

08.02.2023 in I.A. No. 886 of 2023 before this Tribunal. The

Adjudicating Authority was directed by this Tribunal to adjourn the

liquidation application on 21.02.2023. This Tribunal also set aside the

order of 08.02.2023 and permitted consideration of the Resolution Plan

filed the Appellant vide its order dated 25.04.2023.

 The Resolution Plan of the Appellant was duly deliberated by the CoC

in its 23rd meeting held on 12.05.2023. The CoC in the same meeting

decided not to consider any other Resolution Plan apart from the one

submitted by the Appellant and inter-alia passed a resolution with

97.56% vote share seeking extension of CIRP period by 60 days.

 The RP accordingly filed I.A. No. 3016 of 2023 seeking extension of the

CIRP period before the Adjudicating Authority.

 While I.A. No 3016/2023 was still pending, the 26th meeting of the CoC

held on 23.08.2023 after due deliberations agreed to vote upon the

resolution plan of the Appellant.

 The Adjudicating Authority on 30.11.2023 disposed of I.A. No. 3016 of

2023 by extending the CIRP period by 60 days. However, it also directed

the RP to issue fresh Form-G to invite EOIs from other resolution

applicants also and to complete the CIRP process within the extended

period of 60 days.

Company Appeal (AT) (Insolvency) No. 1611 of 2023 5

 The Appellant has preferred this Appeal assailing the impugned order

on the ground that the Adjudicating Authority directed the publication

of fresh Form-G while the prayer made before the Adjudicating

Authority was only for the purpose of extension of CIRP period by 60

days.

3. The Learned Sr. Counsel for the Appellant while making his

submissions adverted attention to the orders of this Tribunal by which the

recall order of the Adjudicating Authority dated 08.02.2023 was set aside and

the CoC allowed to consider the Resolution Plan which had been submitted

by the Appellant on 30.01.2023. It was also submitted that in pursuance to

this Tribunal's orders, the Resolution Plan of the Appellant was deliberated at

length in the 23rd CoC meeting held on 12.05.2023. The CoC in the said

meeting decided to only consider the Resolution Plan of the Appellant. The

CoC members in the said meeting had also considered the issuance of fresh

Form-G and took a conscious decision not to consider any other Resolution

Plan. The same meeting also decided to pass a resolution seeking extension

of CIRP period by 60 days to enable consideration and voting on the plan

submitted by the Appellant. It was asserted that this decision of the CoC was

taken with 97.56% vote share and was in exercise of commercial wisdom of

the CoC.

4. It was further added that the CoC in its 26th meeting held on 23.08.2023

again deliberated on the issue of fresh Form-G and rejected this proposition

on the ground of being a time-consuming exercise. The CoC also concluded

that the Resolution Plan of the Appellant was of a higher value in comparison

Company Appeal (AT) (Insolvency) No. 1611 of 2023 6

to the plan submitted by earlier resolution applicants and hence decided to

vote only on the Resolution Plan of the Appellant.

5. The Learned Sr. Counsel for the Appellant emphatically submitted that

the CoC in its 23rd and 26th meeting had clearly decided, after holding detailed

deliberations, not to re-run the CIRP process to avoid unnecessary delays and

had resolved to extend the CIRP period by 60 days solely for the purpose of

consideration of and voting on the Resolution Plan of the Appellant. Under

such circumstances, when the RP filed I.A. No. 3016 of 2023, it was not

justifiable on the part of the Adjudicating Authority to direct the issuance of

Form-G as this decision was not in consonance with the commercial wisdom

of the CoC. Moreover, this direction was not a relief prayed for by the RP and

that this direction would jeopardise the strict and tight time-lines of the CIRP

process. It was also contended that it is settled law that a relief or direction

for which no prayer or pleading is made cannot be granted especially when

there were no such compelling circumstances.

6. It was also contended that impugned order of the Adjudicating

Authority directing republication of Form-G run foul of the stringent time-

lines provided for conclusion of CIRP process under the IBC. The CIRP period

of 330 days having already expired on 18.06.2022, allowing fresh EOIs would

entail further negotiations which would render it improbable to complete the

CIRP process within the period of 60 days and on this ground too, the

impugned order was assailed.

7. The Learned Counsel for the Respondent No. 1/RP also submitted that

the CoC in the 23rd meeting had resolved to file an application before the

Company Appeal (AT) (Insolvency) No. 1611 of 2023 7

Adjudicating Authority for extension of the CIRP time period by 60 days as

this extension was required to enable consideration and voting on the

resolution plan of the Appellant. It was added that since I.A. No. 3199/2023

had already been filed by the RP seeking liquidation of the Corporate Debtor

and during its pendency, I.A. No. 3016/2023 was also filed seeking extension

of time and as both the I.A's contained prayers in contradiction to each other,

the CoC in its 25th meeting held on 01.08.2023 resolved to withdraw I.A. No.

3199/2023. This resolution for withdrawal of liquidation application was

passed by the CoC with 97.56% votes.

8. It was also submitted by the Learned Counsel for the RP that during

the hearing of I.A. No. 3016/2023, since an oral enquiry was made by the

Adjudicating Authority from the RP whether a fresh Form-G be issued, this

issue was put to discussion before the CoC members in the 26th meeting and

after due deliberations, the CoC in the exercise of its commercial wisdom,

decided not to publish any fresh Form-G. It was added that the minutes of

the CoC meetings clearly makes a note that issue a fresh Form-G would be a

time-consuming process and hence was not recommended. The CoC had also

noted that the resolution plan value of the Appellant was better than the

values offered by the erstwhile potential resolution applicants.

9. Echoing similar viewpoint, it was submitted by the Learned Counsel for

the Union Bank of India/Respondent No. 2, being the majority vote share

holder in the CoC, that it had been decided by the CoC in their 20th and 21st

meetings to reject all 3 resolution plans received from resolution applicants

as they were offering less than the liquidation value of the Corporate Debtor

Company Appeal (AT) (Insolvency) No. 1611 of 2023 8

and to go ahead with liquidation of the Corporate Debtor. Even at the later

stage, when the CoC in compliance to the directions of the Adjudicating

Authority and this Tribunal chose to deliberate on the Resolution Plan of the

Appellant, it had compared the enhanced value offered by them in comparison

to the erstwhile resolution applicants and thereafter decided to put to

consideration and voting only the Resolution Plan of the Appellant. The CoC

had decided not to issue fresh Form-G as much time had already elapsed

since the Corporate Debtor was admitted into CIRP and any issue of fresh

Form-G would further add to the time-lag which would affect the NPV of the

Corporate Debtor.

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

Counsel for the parties and perused the records carefully.

The narrow issue for consideration before us is whether the Adjudicating

Authority was justified in passing the impugned order directing fresh issue of

Form G in the facts of the present case when the CoC had already decided

against this course of action.

11. For a proper appreciation of the issue at hand, it may be necessary to

notice the sequence of events in the present case. The Corporate Debtor was

admitted into CIRP by the Adjudicating Authority on 26.02.2020. The RP

issued Form-G on 5 occasions following which three Resolution Plans were

received. These plans were considered by the CoC in its 20th and 21st meetings

and rejected as the value of the plans was not found optimal and it was

decided to seek liquidation of the Corporate Debtor. However, while the I.A.

No 3199 for liquidation was pending, the Adjudicating Authority allowed I.A.

Company Appeal (AT) (Insolvency) No. 1611 of 2023 9

No 228 filed by the Appellant on 16.01.2023 for consideration of their

Resolution Plan by observing that: "We are conscious that that the object

of the IBC, 2016 is to rescue the CD in distress. Thus, the plea put forth

by the Applicant in the IA deserve to be accepted."

12. The Adjudicating Authority however recalled this order on 08.02.2023.

This recall order was subsequently challenged before this Tribunal. This

Tribunal by its order dated 21.02.2023 directed adjournment of the

liquidation application and by subsequent order on 25.04.2023 permitted the

Appellant to file the Resolution Plan. The relevant excerpts of the order is as

extracted below:

"2. Learned Counsel for the Union Bank of India having 86% vote share submits that Union Bank has no objection if the plan submitted by the Appellant is considered.

3. Learned Counsel for Appellant submits that plan has already been submitted in pursuance of the order dated 16.01.2023 on 30.01.2023. Hence, there was no occasion to recall the order dated 16.01.2023.

4. In view of the statement made by the Learned Counsel for the parties, we are of the view that plan having already been submitted there was no occasion for recall of the order 16.01.2023, moreover, only prayer made was to make certain corrections in the order dated 16.01.2023. The order dated 08.02.2023 in so far as it recall the order dated 16.01.2023 is set aside.

The Appeal is disposed of."

(Emphasis supplied)

The above order therefore allowed consideration of the Resolution Plan of the

Appellant which had already been submitted by the Appellant on 30.01.2023.

It is also noticed that the majority share-holder in the CoC with 86% vote

share had no objection to the consideration of the plan.

Company Appeal (AT) (Insolvency) No. 1611 of 2023 10

13. Thereafter, the Resolution Plan submitted by the Appellant was placed

before the 23rd CoC meeting. The summary of the cured plan of the Appellant

was shared with the CoC and thereafter the same was discussed by the CoC

in the said meeting following which the Appellant was further asked to

increase the plan value and offer the best possible plan as may be seen at

Item No. 07 of the 23rd meeting of the CoC as placed at pages 86-87 of the

Appeal Paper Book ("APB" in short).

14. The CoC members in the said meeting also considered the request

received from erstwhile resolution applicants for reconsideration of their

plans. However, the CoC after deliberations decided not to consider any other

Resolution Plan as it would become an endless exercise besides leading to

avoidable litigation. It also decided against issuance of fresh Form-G. The

relevant portions of CoC deliberations as minuted at Item No. 8 is as below:

"Item No. 08

To Discuss the mail received from Mr. Pankaj Saraogi The Chairman presented before the CoC the mail dated 09.05.2023 received from Mr. Pankaj Saraogi on behalf of "Consortium of Pankaj Saraogi and Ranjana Saraogi" who was a PRA pursuant to Form G dated 06.11.2021, requesting for re-

consideration of his plan.........

The Chairman invited suggestions of CoC on consideration of above stated applicants and whether CoC wants to consider issuance of fresh Form G for allowing the PRA to submit the revised/new plan. Representative of UBI opined that this way it will be never ending process and one applicant or other will move to NCLT and will invite litigation. The Chairman apprised the members that Mr. Saraogi has already approached the NCLT once for re-consideration of his plan. But his application was dismissed with cost. After detailed discussion and deliberations, it was concluded by the CoC that only plan of Mr. Hanjra shall be considered in

Company Appeal (AT) (Insolvency) No. 1611 of 2023 11

accordance with the appropriate NCLAT directions obtained by PRA."

(Emphasis supplied)

15. We further notice that the same meeting also taking cognizance of the

fact that CIRP period had already expired in June, 2022 decided to pass a

resolution seeking extension of CIRP period by 60 days to enable

consideration and voting on the Resolution Plan submitted by the Appellant.

This issue was deliberated as Item No.10 in the CoC, the relevant portions of

the minutes being as reproduced below:

"Item No. 10

To approve for extension of CIRP period and seeking exclusion of time lost in litigation from CIRP period The Chairman shall apprised the CoC members that the 330 days of CIRP period have expired on 18.06.2022 and the liquidation application was filed in June 2022. However, the same is pending adjudication. As discussed in agenda item no. 6 above, the plan submitted by Mr. Jatindra Pal Singh Hanjra, through Authorized Representative, Mr. Ajay Nagpal is to be considered by CoC. The Chairman apprised the need to apply for extension of CIRP period and seeking exclusion of period lost in litigation.

After discussion and deliberations, following resolution was proposed to be passed for approval by physical vote at the meeting:

Proposed Resolution "RESOLVED THAT the approval of the CoC be and is hereby accorded for seeking extension of CIRP period by another 60 days for consideration and voting on the plan submitted by PRA Mr. Jatindra Pal Singh Hanjra, through Authorised Representative, Mr. Ajay Nagpal.

RESOLVED FURTHER THAT the approval of the CoC be and is hereby accorded for filing suitable application before Hon'ble NCLT seeking exclusion of time lost in litigation i.e. from date of filing of liquidation application till date on which further extension of 60 days is granted by Hon'ble NCLT.

Company Appeal (AT) (Insolvency) No. 1611 of 2023 12

RESOLVED FURTHER THAT Resolution Professional and is hereby authorised to file suitable application before Hon'ble NCLT to give effect to above stated resolution."

(Emphasis supplied)

It is pertinent to note that the aforesaid resolution was approved by the CoC

by 97.56% voting. Accordingly, an I.A. No. 3016 of 2023 was filed before the

Adjudicating Authority seeking extension of the CIRP period.

16. While the I.A. No. 3016 of 2023 was pending before the Adjudicating

Authority, the RP had convened the 26th CoC meeting on 23.08.2023 wherein

the Resolution Plan of the Appellant was taken up for consideration. It is

significant to note that the RP brought it to the notice of the CoC that during

the ongoing hearing of I.A. No. 3016/2023, the Adjudicating Authority had

orally enquired from the RP whether a fresh Form-G be issued to give chance

to other potential resolution applicants to participate in the submission of

plans. This oral suggestion made by the Adjudicating Authority was put to

discussion as Item No. 5 in the 26th CoC meeting and the relevant minutes of

the discussion rejecting the issuance of fresh issue of Form-G is as

reproduced below:

"Item No. 05

To apprise about the mails received from parties interested in submission of resolution plan.

.....................

The representative of Union Bank figured out the following reasons for not publishing the form G afresh:

1. It will be a time-consuming exercise and atleast 3 more months will be needed to re-run the process of receipt and negotiation on the plan.

Further, no specific directions of Hon'ble NCLT are there in this regard. In case, any such directions were given CoC will abide by them.

Company Appeal (AT) (Insolvency) No. 1611 of 2023 13

2. The Hon'ble NCLAT vide order dated 25.04.2023 has only specifically referred to consideration of plan submitted by Mr. Jatinder P. Hanjra as allowed by order of Hon'ble NCLA T dated 16.01.2023. There was no direction to consider plan of any other party or to publish form G. In accordance with the prayer sought in appeal, submission of UBI, as captured in the order, also related to consideration of plan of Mr. Hanjra only. Thus no deviation from the intent of the order shall be made by considering plans of other applicants.

3. Resolution plans of the earlier three PRAs were of a lower value than the resolution plan of offered by Mr. Hanjra.

The values of the plans (without CAPEX and Contingency Reserve) as submitted by the earlier three PRAs and by Mr. Hanjra is as follows:

S.No. 1 2 3 4

Pankaj Saraogi Jatinder P. Name of PRA Anuj Vickey Gupta and Ranjana Hanjra Goyal Saraogi

OriginalRevised

Secured FC (in Rs. 7.00 10.55 14.15 18.10 19.00 Crore) Unsecured FC (in 0.00 0.40 0.30 0.30 0.25 Rs. Crore) Operational 0.00 0.10 0.10 0.10 0.25 Creditor (in Rs.

Crore) Plan Value (in 7.00 11.05 14.55 18.50 19.50 Rs. Crore)* Term of the plan 12 12 9 6 3 months months months months months *CIRP cost as per actual in all plans

While the initial value proposed by the HI in the plans received by the CoC pursuant to form G dated 06.11.2022 was Rs. 14.55 Cr., Mr. Hanjra has considerably enhanced the value of the plan and is offering a total of Rs 19.50 crore within 3 months period. Out of the said amount, Rs. 19.25 Crore shall be available to the Secured Financial Creditors which as compared to the other plans available is on the higher side.

Thus it was concluded that as the resolution plan of Mr. Hanjra is offering an enhanced value, CoC is of a view that the instant resolution plan should be considered, in view of Hon'ble NCLAT direction vide order

Company Appeal (AT) (Insolvency) No. 1611 of 2023 14

dated 25.04.2023, for voting rather than issuing fresh Form G which will consume a lot of time and may not yield the desired results. Further there is a chance that the existing PRA also may decide to withdraw the plan."

(Emphasis supplied)

17. We notice that the 26th meeting of the CoC not only undertook an

exercise to compare the resolution plans submitted by erstwhile applicants

with that of the Appellant but discussed the Resolution Plan of the Appellant

and decided that it could be put to e-voting by CoC members after CIRP

extension is granted. The relevant discussions are as noted below:

"Item No. 07

To discuss the cured Resolution Plan received from PRA Mr. Jatinder Pal Singh Hanjra.

.............

The representative of Union Bank of India further requested Mr. Nagpal to increase the plan value to which Mr. Hanjra replied it to be the best offer as he has already revised the amount as compared to his original plan.

After discussions and deliberations, the PRA offered the final amount.

With this increase in plan value, it was concluded that the plan submitted by Mr. Jatinder Pal Hanjra was legally compliant and finally negotiated at. It was discussed that the plan can be put to e-voting by CoC members. At this juncture, the RP highlighted that as discussed in Item no. 6 above since the CIRP extension is yet not granted and Regulation 18(2) do not permit CoC to vote upon any resolution having impact on resolution plan, the voting on resolution plan cannot be conducted in the present circumstances.

Thereafter, Mr. Ajay Nagpal took a leave from CoC. It was the concluded that final negotiation were done with the PRA and once the exclusion/extension from Hon'ble NCLT is granted in IA 3016 of 2023, then only the resolution plan negotiated by the CoC will be put to vote."

(Emphasis supplied)

Company Appeal (AT) (Insolvency) No. 1611 of 2023 15

18. Soon after the 26th CoC meeting, the I.A. No 3016/2023 was disposed

of by the Adjudicating Authority on 30.11.2023 by extending the CIRP period

by 60 days. Vide this impugned order, "in the interest of justice and

maximization of the value of the Corporate Debtor", it directed the RP to

invite fresh EOI through wider publication of Form-G to enable any

prospective resolution applicant to participate in the resolution process. It

also directed that the completion of the process within 60 days extended

period.

19. Given the facts and circumstances of the present case as narrated above,

we find that despite lapse of four years, no resolution had fructified so far.

Inspite of issue of Form G on five occasions, no viable resolution plans had

cropped up compelling the CoC to recommend liquidation of the Corporate

Debtor. However, on an application filed by the Appellant seeking

consideration of their Resolution Plan, the Adjudicating Authority taking note

that the object of the IBC is to rescue the Corporate Debtor in distress allowed

the consideration of the Resolution Plan of the Appellant on 16.01.2023. The

subsequent decision of the Adjudicating Authority on 08.02.2023 to recall its

order of 16.01.2023 was set aside by this Tribunal. This Tribunal on

25.04.2023 taking note of the fact that Resolution Plan of the Appellant was

already submitted and the majority member of the CoC holding 86% share

had expressed its no objection to consider the same, allowed consideration of

the Resolution Plan of the Appellant.

20. Thereafter, we notice that the CoC in its 23rd and 26th meetings took up

consideration of the Resolution Plan of the Appellant. While doing so, it took

Company Appeal (AT) (Insolvency) No. 1611 of 2023 16

note of the fact that during consideration of the IA for extension of time, an

oral query had been made by the Adjudicating Authority as to whether the

CoC is inclined to consider only the resolution plan of the Appellant. The CoC

duly considered this aspect and came to the conclusion that despite 5 times

Form-G having been issued, which did not bear any results, issue of any

further round of Form-G would only add to delays and turn the CIRP clock

back which would not be good for the health of the Corporate Debtor. It also

noted that there were no express directions as such from the Adjudicating

Authority for issue of fresh Form-G. The CoC therefore consciously decided

not to re-open the process by adducing detailed reasons which have already

been captured in Para 16 above.

21. This decision of the CoC not to issue fresh Form-G has been also

canvassed by the Learned Counsels of the Appellant, RP and Union Bank of

India. It has been contended by them that fresh publication of Form-G would

run counter to the stringent time lines prescribed by the IBC for completion

of the CIRP process. It has been contended by Learned Sr. Counsel for the

Appellant that the impugned order by directing the issue of fresh Form-G ran

contrary to the commercial wisdom of the CoC and that this relief not having

been prayed for but granted suo motu by the Adjudicating Authority

prejudicially affected the interests of the Appellant as well as cause delay in

the CIRP process which would diminish the health and value of the Corporate

Debtor.

22. It would be relevant and constructive to note the overarching objectives

of the IBC as enshrined in the Preamble which reads as follows:

Company Appeal (AT) (Insolvency) No. 1611 of 2023 17

"An Act to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership persons and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto."

(Emphasis supplied)

The same aspirations resonate in the Statement of Objects and Reasons of

this legislative enactment. The mandate and objective of the IBC clearly

emphasizes reorganization and insolvency resolution of corporate debtor in a

time bound manner for maximization of the value of the assets. Speed is the

essence of IBC. The maximization of the value of the Corporate Debtor is also

admittedly an object of the CIRP. However, the said maximization has to be

achieved within the timeline provided in the scheme. Needless to add, there

has to be a respectful balance and harmony between the twin objectives of

timely resolution and asset maximization. The CoC members took cognizance

of the fact that CIRP period of 330 days stood expired and now that a

resolution plan has come up seeking to provide substantially much more than

the liquidation value, it decided to consider only this plan and place it for

voting once the Adjudicating Authority allowed the extension of the CIRP

period for which an IA was pending before the Adjudicating Authority. The

CoC while taking this decision had kept in mind the objective of the IBC of

making the CIRP a time bound process. Therefore, when a resolution plan has

already been received by the CoC and the CoC in the exercise of its commercial

wisdom has decided to only consider this plan, allowing other potential

Company Appeal (AT) (Insolvency) No. 1611 of 2023 18

resolution applicants by the Adjudicating Authority to paradrop afresh at this

stage when CIRP period is over and that too contrary to the deliberations of

the CoC, in our considered opinion, cannot be countenanced.

23. The CoC in its deliberations had also noted that the erstwhile resolution

applicants had requested for consideration of their plans. We also notice that

the CoC undertook an exercise to compare the resolution plans submitted by

erstwhile applicants with that submitted by the Appellant and concluded that

the plan value of the Appellant was distinctly better than the others. Clearly

therefore all aspects of the plan including the plan value of the Appellant and

other potential Resolution Applicants were in the knowledge of the CoC which

on having been deliberated at length testifies the exercise of commercial

wisdom by the CoC. This also shows that the CoC was well aware that the

objective of IBC to ensure maximisation of the value of assets does not get

defeated. As far as the plan value which was offered by the Appellant and the

plan value which had been offered by other resolution applicants, evaluation

of the same falls within the domain of commercial wisdom of CoC.

24. Such opinion expressed by the CoC after due deliberations in the

meetings through voting is the collective business decision and constitutes an

expression of the CoC's commercial wisdom. And it is here that primacy of the

commercial wisdom of the CoC comes into play. The Adjudicating Authority

cannot foist its own wisdom upon the CoC. The supremacy of commercial

wisdom of the CoC has been reaffirmed time and again by the Hon'ble

Supreme Court. The Hon'ble Apex Court in its judgement in "K. Sashidhar

Vs. Indian Overseas Bank and Ors (2019) 12 SCC 150" has held:

Company Appeal (AT) (Insolvency) No. 1611 of 2023 19

"52.................... Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their them of experts. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the "commercial wisdom" of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable."

25. We may also notice a judgment of the Hon'ble Supreme Court in Civil

Appeal Nos. 3665-3666 of 2020 in the matter of "Ngaitlang Dhar vs. Panna

Pragati Infrastructure Private Limited & Ors." where in para 31, the

following 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, as per voting shares, is the collective business 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

Company Appeal (AT) (Insolvency) No. 1611 of 2023 20

been consistently reiterated in a catena of judgments of this Court, including:

(i) K. Sashidhar v. Indian Overseas Bank and Others

(ii) Committee of Creditors of Essar Steel India Limited Through Authorized Signatory v. Satish Kumar Gupta and Others,

(iii) Maharashtra Seamless Limited v. Padmanabhan Venkatesh and others,

(iv) Kalpraj Dharamshi and Another v. Kotak Investment Advisors Limited and Another.

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

26. Ultimately it is the commercial wisdom of the CoC which operates to

approve what is to be the best resolution plan. The Adjudicating Authority

with the limited powers of judicial review available to it cannot substitute its

views with the commercial wisdom of the CoC. In view of the above, we hold

that the Adjudicating Authority has committed an error in directing the

issuance of fresh Form-G while allowing the extension of the CIRP by 60 days

when the CoC had deliberated at length on this issue and had decided against

the option of having other potential resolution applicants from joining the

fray.

27. In view of the foregoing discussion and conclusions, we set aside that

part of the impugned order wherein the Adjudicating Authority has directed

the RP to invite fresh expression of interest through wider publication of

Form-G. We however affirm that part of the impugned order wherein the

period of CIRP has been extended by 60 days. We further direct the RP to

Company Appeal (AT) (Insolvency) No. 1611 of 2023 21

place the resolution plan of the Appellant before the CoC for consideration

and voting and complete the CIRP within the extended period. The appeal is

allowed with the aforesaid observations. With this, I.A. No. 171 of 2024 also

stands disposed of on the above terms. No order as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

Place: New Delhi Date: 16.02.2024

Ram N.

Company Appeal (AT) (Insolvency) No. 1611 of 2023