M/S Pioneer Engineering Industries vs Anjali Capfin Private Limited

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NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI COMPANY APPEAL (AT) (INS) NO.1382 OF 2024 In the matter of: Pioneer Engineering Industries Appellant Vs Anjali Capfin Pvt Ltd & Ors Respondent For Appellant:Mr. Nakul Sachdeva, Mr Karandeep Singh and Mr Abhinandan Sharma, Mr Sagar Arora, Advocates. For Respondent:Mr Abhijeet Sinha, Sr Advocate, Mr Abhishek Anand, Mr Karan Kohli, Ridhima, Advocates Mr Sanyam Goel, RP in person. Mr Ankur Goel Mr Saket Singh, Advocates for R1. Mr Mohit, Mr Gupta, Advocates Mr Shalya Agarwal, Mr Sandeep Vij, Ms Ritika Gaur, Mr Neeraj, Advocates. With COMPANY APPEAL (AT) (INS) NO.1384 OF 2024 In the matter of: Pioneer Engineering Industries Appellant Vs Anjali Capfin Pvt Ltd & Ors Respondent For Appellant:Mr. Nakul Sachdeva, Mr Karandeep Singh and Mr Abhinandan Sharma, Mr Sagar Arora, Advocates. For Respondent:Mr Abhijeet Sinha, Sr Advocate, Mr Abhishek Anand, Mr Karan Kohli, Ridhima, Advocates Mr Sanyam Goel, RP in person. Mr Ankur Goel Mr Saket Singh, Advocates for R1. Mr Mohit, Mr Gupta, Advocates Mr Shalya Agarwal, Mr Sandeep Vij, Ms Ritika Gaur, Mr Neeraj, Advocates. With 2

COMPANY APPEAL (AT) (INS) NO.1486 OF 2024 In the matter of: Pioneer Engineering Industries Appellant Vs Primus Pipes & Tubes Ltd & Anr Respondent For Appellant:Mr. Nakul Sachdeva, Mr Karandeep Singh and Mr Abhinandan Sharma, Mr Sagar Arora, Advocates. For Respondent:Mr Abhijeet Sinha, Sr Advocate, Mr Abhishek Anand, Mr Karan Kohli, Ridhima, Advocates Mr Sanyam Goel, RP in person. Mr Ankur goel Mr Saket Singh, Advocates for R1. Mr Mohit, Mr Gupta, Advocatges Mr Shalya Agarwal, Mr Sandeep Vij, Ms Ritika Gaur, Mr Neeraj, Advocates. With COMPANY APPEAL (AT) (INS) NO.1596 OF 2024 In the matter of: Anjali Capfin Pvt Ltd Appellant Vs Sanyam Goel & Ors Respondent For Appellant:Mr. Nakul Sachdeva, Mr Karandeep Singh and Mr Abhinandan Sharma, Mr Sagar Arora, Advocates. For Respondent:Mr Abhijeet Sinha, Sr Advocate, Mr Abhishek Anand, Mr Karan Kohli, Ridhima, Advocates Mr Sanyam Goel, RP in person. Mr Ankur Goel Mr Saket Singh, Advocates for R1. Mr Mohit, Mr Gupta, Advocates Mr Shalya Agarwal, Mr Sandeep Vij, Ms Ritika Gaur, Mr Neeraj, Advocates. With COMPANY APPEAL (AT) (INS) NO.1597 OF 2024 In the matter of: Anjali Capfin Pvt Ltd Appellant 3

Vs Sanyam Goel & Ors Respondent For Appellant:Mr. Nakul Sachdeva, Mr Karandeep Singh and Mr Abhinandan Sharma, Mr Sagar Arora, Advocates. For Respondent:Mr Abhijeet Sinha, Sr Advocate, Mr Abhishek Anand, Mr Karan Kohli, Ridhima, Advocates Mr Sanyam Goel, RP in person. Mr Ankur goel Mr Saket Singh, Advocates for R1. Mr Mohit, Mr Gupta, Advocatges Mr Shalya Agarwal, Mr Sandeep Vij, Ms Ritika Gaur, Mr Neeraj, Advocates. JUDGEMENT

JUSTICE YOGESH KHANNA, MEMBER (Judicial) These are five appeals against two orders both of 4th June, 2024 passed

by the Ld. NCLT.

2. Company Appeal (AT)(Ins) No.1382/2024 challenges an order dated

04.06.2024 passed by Ld. Adjudicating Authority in IA No.30/2023 and

whereas Company Appeal (AT)(Ins) No.1384 and 1486 of 2024 challenges

order dated 04.06.2024 passed in IA No.568/2023. Company Appeal (AT)(Ins)

No.1596 and 1597 of 2024 challenges both the orders dated 04.06.2024

passed in IA No. 30/2023 and 568/2023 viz approval of the Resolution Plan.

3. The issue in three appeals viz. Company Appeal (AT)(Ins) No.1382, 1384

and 1486/2024 is the Ld. NCLT has no power to modify the resolution plan.

The resolution plan submitted worth Rs.18 crores was got approved by the

CoC by 79.10% of votes. The CoC Members included Kotak Mahindra Bank

having 79.10% of the votes; Bank of Baroda with .72% votes and Anjali Capfin

Pvt Ltd held balance of voting power.

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4. The learned counsel for the appellant referred to various paras of

resolution plan to show how some conditions, envisaged in the resolution

plan, stood modified by the Ld. Adjudicating Authority and thus acted beyond

its jurisdiction. The said relevant para of the resolution plan are as under:-

"19.l That pursuant to the approval or the Resolution Plan. if any property' or asset or the Corporate Debtor is acquired in accordance with law by either the State Govenm1ent, Central Government, or any statutory authority, then the compensation received in respect of such acquisition will solely accrue to the Corporate Debtor (managed by the Resolution Applicant). It is clarified that no creditor (financial, operational or any other creditor) will have any right on the said compensation (by whatever name called).

44. TREATMENT OF AVOIDANCE TRANSACTION UNDER CHAPTER-II That from the Effective Date the Resolution Applicant will take necessary steps for irnpleadment of itself as the applicant in respect of all avoidance transactions filed by the Resolution Professional during the CIRP. That any proceeds arising out from the favourable decision in the matter of any avoidance transaction shall be split proportionately between the Resolution Applicant and the unsecured financial creditors, in proportion of the legal cost of carrying on such litigation qrta the avoidance transaction being borne by the Resolution Applicant and the unsecured financial creditors. In the event the unsecured financial creditors fail or refuse to contribute to the cost of the said litigation, then the Resolution Applicant shall have the sole right on the entire proceeds arising out from the favourable decision in the matter of any avoidance transaction.

11 . ..Effective Date" means any of the following concluding event. whichever is later:

l. The 7th day from the Day from the date of approval of this plan by Hon'ble NC:LT in the event no appeal is filed by any party against the resolution plan before the Hon'ble NCLAT: or II. The 7th day from the 31" day from the date of order of "Hon'ble NCLAT. provided no appeal is pending before the Hon'ble NCLAT and no appeal is filed by any party against the resolution plan before the Hon'ble Supreme Court; or 5

Ill. The 7th day from the date of final order by Hon'ble Supreme Court, provided no other appeal is pending before the Hon'ble Supreme Court.

5. Heard.

6. Admittedly, while disposing of Respondent No. 1's application viz IA

No.30/2024, the Ld. NCLT has wrongly recorded the fact the Resolution Plan

submitted by the Appellant does not account for the appropriation of any

purported compensation that may be received from the acquisition of any part

of the Corporate Debtor's land and has imposed the following condition: "

...The acquisition process, covered under N.H.A.I's notification, is stalled due to the moratorium under Section 14 of the Code. Once completed, the compensation is to be retained by the Resolution Applicant, and the current plan does not account for this amount. However, we have decided this aspect in IA No. 568/2023 for approval of resolution plan that if the compensation is received, it will be distributed amongst all the Creditors according to Section 53 of the Code, after satisfying the claims admitted by the RP/COC."

("Modification").

7. Pertinently, by way of the Plan Approval Order, the Ld. NCLT has

observed that, "...37. After hearing, we therefore observe that this amount of

Rs. 10 crore is to be distributed amongst all the Creditors in accordance with

the provisions of Section 53 of the Code, subject to the satisfaction of the claim

lodged and admitted by the RP/COC.". Notably, the referred parts of the Plan

Approval Order have also been impugned by the Appellant by way of Company

Appeal (AT) (Ins.) No. 1384 of 2024.

8. Now the Impugned Order, to the extent it imposes the Modification, is

erroneous and contrary to settled principles of law as the Ld. NCLT has failed

to consider that Clause 19(l) of the Resolution Plan specifically provides for 6

the same and states, "...pursuant to the approval of the Resolution Plan, if

any property or asset of the Corporate Debtor is acquired in accordance with

law by either the State Government, Central Government, or any statutory

authority, then the compensation received in respect of such acquisition will

solely accrue to the Corporate Debtor (managed by the Resolution Applicant).

It is clarified that no creditor (financial, operational or any other creditor) will

have any right on the said compensation...".

9. Thus even if we assume the said event of the purported acquisition of

the Corporate Debtor's land has already taken place, any compensation that

may be received in the future from the said event of acquisition shall continue

to vest with the Corporate Debtor as the same would constitute 'receivables'

of the Corporate Debtor. Notably, the appropriation of the same has been

specifically provided for in Clause 28 of the Resolution Plan which relates to

'Acquisition of Assets'. Therefore, it is evident the Resolution Plan has

specifically provided for all eventualities relating to the subject matter of the

modification in the present case.

10. Further it be noted a perusal of the minutes of the 8th CoC meeting

and 10th CoC meeting it appears, till date, no notification has ever been

issued by the appropriate government authority for the purported acquisition

of the Corporate Debtor's land and the said fact was also well within the

knowledge of the dissenting financial creditor i.e., Respondent No. 1.

Therefore, there is no intelligible rationale for imposing the instant

modification.

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11. Further a bare perusal of the minutes of the 5th CoC meeting clearly

evince the fact the Appellant's earlier Resolution Plan which included an

upfront payment of INR 7 Crores and a contingent amount of INR 10 Crores,

accounting for any future compensation for any acquisition of the Corporate

Debtor's land, was rejected by the CoC (including Respondent No. 1) on the

grounds of, inter alia, the same contains the said contingency and not being

commercially viable. Subsequently, the Appellant, based on its commercial

understanding and risk appetite, had submitted a fresh Resolution Plan (with

an upfront payment of INR 18 Crores) which accounted for the accrual of any

future compensation that may occur due to the possible acquisition of the

land of the Corporate Debtor. Thus, it is clear the Ld. NCLT has erred by

materially altering the Resolution Plan of the Appellant and ignoring the fact

the Resolution Plan had already accounted for the subject matter of the said

modification.

12. The letter dated 03.05.2018 issued by the U.P. State Highway Authority

to the Ld. District Magistrate, Fatehpur merely reflects the fact that

acquisition of the Corporate Debtor's land may occur in the future. The said

letter dates back to the year 2018 and it is a matter of record even after the

passage of more than six years, no notification for the acquisition of the

Corporate Debtor's land has been issued by any appropriate state

instrumentality. Moreso the said letter was never brought on record by

Respondent No. 1 before the Ld. NCLT.

13. Moreso by imposing the said modification, the Ld. NCLT has failed to

consider the said modification amounts to a material alteration of the terms 8

of the Resolution Plan and goes against the commercial risk assumed by the

Appellant (the Successful Resolution Applicant) and the commercial wisdom

of the CoC, which is impermissible in law.

14. It is trite law that approval of a resolution plan is exclusively in the

domain of the commercial wisdom of the CoC and the extent of judicial review

is limited by the provisions outlined in Section 31 of the Code, concerning the

Ld. NCLT's approval of a Resolution Plan. The limited judicial review available

to the Ld. NCLT, in terms of Section 31 of the Code, lies within the four corners

of Section 30(2) of the Code.

15. The Ld. Adjudicating Authority under sub-section (2) of Section 31 of

the Code, can reject the Resolution Plan, if the same is not in conformity with

the requirements as referred to in sub-section (1) of Section 31 of the Code.

However, there is no provision for making an alteration or modification in the

Resolution Plan approved by the CoC. In other words, the Adjudicating

Authority, of its own accord, cannot make any modification to the resolution

plan.

16. The powers of the Ld NCLT with respect to the approval of the

Resolution Plan does not extend to examine the commercial wisdom of the

CoC and once it is found all the mandatory requirements have been duly

complied with and taken care of by the Resolution Applicant, the process of

judicial review under Section 31 of the Code cannot be stretched to carry out

quantitative analysis concerning a particular creditor. Admittedly, the

Resolution Plan has been approved by the CoC with 79.10% voting share after

taking into account the feasibility and viability of the Resolution Plan. 9

Reliance to the said propositions is placed on paragraph no. 273.1 of the

Hon'ble Supreme Court's decision in Jaypee Kensington Boulevard

Apartments Welfare Association v NBCC (India) Limited [(2022) 1 SCC 401];

paragraph nos. 21-23 of the Hon'ble Supreme Court's decision in SREI

Multiple Asset Investment Trust Vision India Fund v Deccan Chronicle

Marketeers and Others [Civil Appeal No. 1706 of 2023]; paragraph nos. 114-

116 of the Hon'ble Supreme Court's decision in State Bank of India and

Others v The Consortium of Mr.Murari Lal Jalan and Mr. Florian Fritsch and

Anr. [Civil Appeal Nos. 5023-5024 of 2024] and paragraph nos. 31-32 of this

Hon'ble Tribunal's decision in Deccan Chronicle Marketeers and others v

Deccan Chronicle Holdings Ltd. and others [C.A. (AT) (Ins.) No. 982 of 2019].

17. Thus the Ld. NCLT also does not have any jurisdiction to specifically

direct and/or impose a condition for the distribution of an amount that may

be received and/or recoverable by Corporate Debtor amongst the creditors

while approving the Resolution Plan. In JSW Steel Ltd. v Ashok Kumar Gulla

and Ors. [Company Appeal (AT) (Insolvency) No. 467 of 2019] this Tribunal

has held that, inter alia, "... We agree with the submissions made on behalf of

the Appellant that the Adjudicating Authority has no jurisdiction to impose such

conditions with regard to amount as may be recoverable by the 'Corporate

Debtor' in future."

18. Furthermore, in paragraph nos. 28 and 31 of the Impugned Order, the

Ld. NCLT has itself observed it has limited jurisdiction to only approve or reject

the Resolution Plan and the commercial wisdom of the CoC is paramount.

Therefore, it is clear the modification imposed by the Ld. NCLT in the 10

Impugned Order is against the express provisions of the Code and settled law,

as postulated by the Hon'ble Supreme Court and this Tribunal.

19. Therefore, in view of the above, the Adjudicating Authority has no

jurisdiction to enter into the commercial aspects of the resolution plan and to

interfere with the wisdom of the CoC. It is a settled law the Adjudicating

Authority cannot sit in appeal with respect to financial implications as

considered by the CoC.

20. In view of the above-mentioned facts and legal position, the

modification made to the resolution plan are set aside, and hence these three

appeals are thus allowed.

Company Appeal (AT)(Ins) No.1596 and 1597 of 2024

21. The Company Appeal (AT)(Ins) No.1596 and 1597 of 2024 challenges

the orders dated 04.06.2024 passed in IA No.30/2023 and IA No.568/2023,

relating to the approval of Resolution Plan.

22. The contentions as raised by the Learned counsel for the Appellant in

these appeals are as follows:-

a) The Resolution Plan of the SRA is nothing more than a real estate

transaction as the Corporate Debtor's land is in the process of land

acquisition whereby compensation of more than 10 Crores shall accrue

to the Corporate Debtor. It is further alleged the resolution plan value

is lesser than the liquidation value of the Corporate Debtor as the value

of the said compensation related to the purported land acquisition has

not been taken into account;

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b) The Ld. NCLT has approved the Resolution Plan of the Corporate

Debtor without taking into consideration the fact that no new valuation

report was obtained by the Resolution Professional at the time of

consideration of the Resolution Plan dated 09.10.2023. The Appellant

has also alleged the valuation of the land carried out by the Resolution

Professional was lesser than the actual circle rate notified for the land

parcel owned by the Corporate Debtor;

c) any proceeds that may arise from any recovery on account of the

pending PUFE applications [I.A. No. 299 of 2022 and I.A No. 444 of 2022]

have not been factored in while arriving at the liquidation value. It is

further argued the SRA has not only proposed to take control of these

PUFE applications but has also asked for a share in any recovery made

thereof. It is further argued the Resolution Plan also does not specify

the exact share of such recovery;

d) the Ld. NCLT has approved the Resolution Plan of the Corporate

Debtor without due consideration of the fact the Resolution Plan was in

violation of clause 1.8.1 and 1.9 of the Request for Resolution Plan

("RFRP");

e) the Addendum dated 21.10.2023 to the Resolution Plan is defective

as, inter alia, there is mismatch in the dates contained in the said

Addendum;

f) the Resolution Plan submitted by the SRA is in violation of Regulation

39(1A) of the Regulations as the Resolution Plan has been modified on

multiple occasions and lastly, 12

g) the Resolution Plan penalizes the Appellant for not assenting to the

same as it mandates the leftover amount allocated towards the CIRP

cost would be retained by the SRA in the event the Appellant does not

assent to the Resolution Plan.

23. Now we proceed to decide the issues raised by the appellant herein:

As regard contention (a) The Resolution Plan in its entirety, is feasible

and viable in terms of the Insolvency and Bankruptcy Code, 2016

("Code") and so is held by the Ld. NCLT in paras 38-45 of the Plan

Approval Order dated 04.06.2024 in I.A. No. 568 of 2023. Further the

Resolution Plan is a prerogative of the Resolution Applicant and is

drafted as per its commercial understanding and risk appetite.

Furthermore, it is a matter of record that, till date, no prescribed

notification for the acquisition of any part of the Corporate Debtor's land

has been issued by any appropriate state instrumentality or is placed

on record and even the Resolution Professional, in the 10th CoC

meeting dated 13.10.2023 has stated no land acquisition notification

has ever been published by the appropriate authorities for the purpose

of the alleged acquisition of the Corporate Debtor's land and further

any future purported compensation that may accrue to the Corporate

Debtor has been accounted for in the instant Resolution Plan submitted

by the Respondent. Clause 19(l) of the Resolution Plan duly

accounts/provides for the said contingency of any future acquisition of

the land of the Corporate Debtor. Now it cannot be expected from a

Resolution Applicant to account for all future contingencies into the

Resolution Plan, especially since the Appellant has failed to produce 13

any concrete evidence to support the existence of the alleged

acquisition. Furthermore, if the said land is to be acquired in the

prospective future, the said contingency cannot be taken into account

on the date of the submission of the Resolution Plan, as the same is

based on the information provided under the Information Memorandum

itself. Moreover, once the Resolution Plan is approved, the rights over

the assets of the Corporate Debtor vest exclusively with the Resolution

Applicant through the new management.

Further we may note that in accordance with the mandate of

Regulations 27 and 35 of the IBBI (Insolvency Resolution Process for

Corporate Persons) Regulations of 2016 ("Regulations"), the liquidation

value of the assets of the Corporate Debtor is based upon the reports

submitted by the IBBI registered valuers, which have been duly

appointed and ratified by the CoC. As far as the allegation that the

actual Liquidation Value of the assets of the Corporate Debtor is greater

than the Resolution Plan Value is concerned, the said contention

cannot be raised by the Appellant at this stage, after it has duly

admitted, in the 5th CoC meeting dated 02.01.2023 that the Resolution

Plan Value (Rs. 17,00,00,000/-) of even the earlier Resolution Plan

submitted by the Answering Respondent was greater than the

Liquidation Value of the Corporate Debtor. Furthermore, no plausible

explanation has been provided by the Appellant for the sudden change

of stance. Therefore, it is evident the Appellant is approbating and

reprobating as per its own convenience. Nevertheless, the Resolution

Plan value is indubitably greater than the Liquidation Value of the 14

Corporate Debtor. Nevertheless, there is no provision in law mandates

that the Resolution Plan Value cannot be less than the Liquidation

Value of the Corporate Debtor as held in Maharasthra Seamless

Limited Vs. Padmanabhan Venkatesh & Ors. [Civil Appeal No. 4242

of 2019] [Paragraph No.26].

Now the powers of the Ld. Adjudicating Authority with respect to

the approval of the Resolution Plan does not extend to examine the

commercial wisdom of the CoC and once it is found all the mandatory

requirements have been duly complied with and taken care of by the

Resolution Applicant, the process of judicial review under Section 31 of

the Code cannot be stretched to carry out quantitative analysis

concerning a particular creditor.

24. Qua contention (b) we may note the valuation of the assets of the

Corporate Debtor has been carried out by independent registered valuers, in

compliance with Regulations 27 and 35 of the Regulations. Admittedly the

Appellant had duly participated in all the CoC meetings leading up to the final

Resolution Plan and has been an active participant in all key decisions taken

in the insolvency proceedings in the instant case. It is matter of record the

Appellant has never raised any such objections in any of the CoC meetings. It

is clear the same is being raised at such a belated stage, as a mere

afterthought, by the Appellant to maliciously derail the instant insolvency

proceedings. Now the Ld. Adjudicating Authority, by way of the Impugned

Order has duly recorded the fact the valuation of the Corporate Debtor carried

out by the registered valuers is in compliance with the provisions of the Code.

Furthermore, by way of the Impugned Order and the Plan Approval Order 15

dated 04.06.2024 in I.A. No. 568 of 2023, the Ld. NCLT has held the

Resolution Plan is in compliance with Section 30(1), Section 30(2) and Section

31 of the Code as well as Regulations 37, 38 and 39 of the Regulations.

25. Coming to contention (c) we find Clause 44 of the Resolution Plan

provides for the treatment of the said pending PUFE applications. The same

provides any proceeds arising out from any favorable decision in the matter

of any avoidance transaction shall be split proportionately between the

Resolution Applicant and the unsecured financial creditors, in proportion of

the legal cost borne by the said parties while carrying on such litigation. The

referenced clause further mandates in the event the unsecured financial

creditor fails to contribute to the cost of the said litigation, then the Resolution

Applicant shall have the sole right on the entire proceeds arising out of such

pending PUFE applications. It is further clarified Regulation 38(2)(d) of the

Regulations specifically mandates the Resolution Plan shall provide for the

manner in which proceedings in respect of any pending PUFE applications

shall be pursued and the manner in which the proceeds emanating from the

same shall be distributed. The statement made by the Authorized

Representative of the Respondent in the 11th CoC Meeting does not amount

to a modification to the Resolution Plan, as alleged. The Respondent, in the

11th CoC meeting, has merely provided a clarification, as sought by the

Appellant qua the treatment of pending PUFE applications. From a perusal of

the minutes of the 11th CoC meeting, it is crystal clear the Respondent had

merely clarified the expenses for pursuing the pending PUFE applications

shall ideally be split equally between the Appellant and the Respondent. The

Respondent further undertook the said clarification would be binding upon 16

the Respondent as the statement of the Respondent was being encapsulated

in the minutes of the 11th CoC meeting. Pertinently, other members of the

CoC (including the Appellant) also concurred with the views of the

Respondent. Thus the terms of the Resolution Plan are in compliance with

the provisions of the Code

26. Coming to contention (d) the appellant has alleged the Resolution Plan

submitted by the Answering Respondent is in violation of the clauses of RFRP

but has failed to sufficiently establish the fact the Resolution Plan is in

violation of a single clause of RFRP. In terms of Clause 1.8.1 of the RFRP, a

Resolution Applicant was required to submit a Binding Submission Bank

Guarantee as Earnest Money Deposit ("EMD"), which was duly submitted by

the Respondent with its first Resolution Plan dated 23.10.2022. However, the

said Resolution Plan was rejected and the EMD was returned. Thereafter, in

the 7th CoC Meeting dated 04.08.2023, wherein the Respondent was

permitted to re-submit the Resolution Plan, the RP requested the Respondent

to submit the copy of the Performance Bank Guarantee of Rs. 3,60,00,000/-

directly with Resolution Plan in order to gain the confidence of the CoC The

Authorized Representative of the Respondent specifically sought confirmation

of the fact the said action was not violative of the RFRP. Even otherwise, the

EMD amounting to Rs. 10,00,000/- was for the purpose of gauging the

seriousness of the SRA and the said object was duly fulfilled by the PBG

deposited by the Respondent. Therefore, there is no material breach of Clause

1.8.1 of the RFRP, as alleged by the Appellant

The Appellant has also alleged the PBG is in violation of Clause

1.9 as the same has been issued by an associate entity i.e., M/s Pioneer 17

Project, in which the sole proprietor of the Resolution Applicant is a

partner. However, we find there is no breach of Clause 1.9 of the RFRP

as, inter alia, Clause 1.9.4 of the RFRP itself provides for the payment

of the PBG by a Parent Company. The Respondent vide its email dated

02.09.2023 to the RP, clarified the said concerns regarding the PBG.

Despite ample opportunity, the Appellant failed to raise any objection

qua the PBG at that point of time

27. Qua contention (d) we note the Appellant, being dissatisfied with the

distribution under the Resolution Plan, has attempted to challenge the

Resolution Plan indirectly by raising entirely baseless objections. The

Addendum dated 21.10.2023 is a valid addendum and the objection so raised

by the Appellant is merely a clerical error which does not warrant any judicial

interference by this Tribunal. A bare perusal of the said Addendum would

reveal it is nothing but merely a clerical defect and the same being raised as

an objection to the Resolution Plan to get such Resolution Plan rejected, which

otherwise is a feasible and viable plan in terms of the Code and the regulations

thereunder. Moreover, the Appellant duly attended the 11th CoC meeting

dated 27.10.2023 but failed to raise any such objection with respect to the

Addendum dated 21.10.2023. Therefore, it does not lie in the mouth of the

Appellant to raise such frivolous issues at a belated stage

28. Qua contention (f) we note the Resolution Plan dated 19.08.2023 has

not been revised more than once. The Resolution Plan, upon the specific

concerns raised by the CoC, including the Appellant, has only been revised

once by way of revised Resolution Plan dated 09.10.2023 and thereafter,

pursuant to the 10th CoC meeting and RP's email dated 14.10.2023, the 18

Respondent submitted an Addendum dated 21.10.2023. Now the Resolution

Plan(s) dated 23.10.2022, submitted by the Respondent and another PRA,

were rejected by the members of the CoC at the very threshold and no

discussion and/or negotiations qua the terms of the said previous Resolution

Plan(s) were undertaken by the members of the CoC. Therefore, the Resolution

Plan dated 19.08.2023, as submitted by the Respondent, was a fresh

Resolution Plan and the same was not in furtherance of the earlier Resolution

Plan dated 23.10.2022. Moreover, after the submission of the Revised

Resolution Plan dated 09.10.2023, the Appellant never raised any similar

objection even in the 10th CoC meeting dated 13.10.2023, and further

deliberated upon the changes to be carried out in the submitted Resolution

Plan. The RP, in the 10th CoC meeting, duly apprised the CoC members since

the Resolution Plan has already been revised once on 09.10.2023, the

changes suggested by the CoC members, including the Appellant, can only be

carried out by way of an addendum. In light of the same, the Appellant,

having failed to raise any protest to the same in any of the CoC meetings,

cannot be permitted to raise this objection at this stage, especially when the

revised Resolution Plan and the Addendum thereof were submitted at the

instance of the suggestions put forth by the members of the CoC. including

the Appellant.

29. Lastly qua contention (g) we find the Respondent has given due

treatment to the Appellant in the Resolution Plan, as mandated by the Code.

Now subject to the payments to the creditors, as mandated under the Code,

it is the prerogative of a Resolution Applicant to decide the distribution of

excess/unutilized amount amongst the creditors. The Resolution Plan 19

provides for a total payment of Rs. 1,04,23,940/- towards CIRP cost. In case,

the said amount is not fully utilized towards CIRP cost, the balance payment

will be paid to the assenting unsecured financial creditor of the Corporate

Debtor. Hence, the Respondent has incorporated these considerations, in

accordance with its commercial understanding and wisdom, and such

incorporation has received due approval from the CoC. Consequently, the

Appellant lacks merit to challenge the Resolution Plan, which has been duly

approved by the CoC. Admittedly, the Appellant has not alleged the

Resolution Plan is in violation of the Section 30(2) (b)(ii) read with Section 53

of the Code. Therefore, at best, the said distribution can be termed as an

incentive mechanism adopted by the Answering Respondent.

30. Section 61(3) of the Code, it outlines the grounds for challenging an

order approving a resolution plan, and it read: -

61(3) An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely:-

(i) the approved resolution plan is in contravention of the provisions of any law for the time being in force;

(ii) there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;

(iii) the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board;

(iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or

(v) the resolution plan does not comply with any other criteria specified by the Board.

20 31. It is pertinent to note that Section 61(3) of the Code is framed in negative

language, and time and again, this Tribunal, as well as the Hon'ble Supreme

Court, has held the scope of interference with regards to an order approving

the Resolution Plan in very limited. Such an order can be set aside only if the

Appellant is able to demonstrate its case falls within the grounds enumerated

in Section 61(3) of the Code. In Ngaitlang Dhar v. Panna Pragati Infrastructure

(P) Ltd., (2022) 6 SCC 172, the Hon'ble Supreme Court has succinctly

encapsulated the said principle as follows: -

32. 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 IBC. It has been consistently held that it is not open to the adjudicating authority (NCLT) or the appellate authority (Nclat) to take into consideration any other factor other than the one specified in Section 30(2) or Section 61(3) 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) IBC. This position of law has been consistently reiterated in a catena of judgments of this Court, including:

(i) K. Sashidhar v. Indian Overseas Bank and Others (2019) 12 SCC 150

(ii) Committee of Creditors of Essar Steel India Limited Through Authorized Signatory v. Satish Kumar Gupta and Others (2020) 8 SCC 531

(iii) Maharashtra Seamless Limited v. Padmanabhan Venkatesh and others (2020) 11 SCC 467

(iv) Kalpraj Dharamshi and Another v. Kotak Investment Advisors Limited and Another (2021) SCC OnLine SC 204

(v) Ghanashyam Mishra and Sons Private Limited Through the Authorized Signatory v. Edelweiss Asset Reconstruction Company Limited Through the Director & Ors. (2021) 9 SCC 657 (emphasis supplied) 21

32. Furthermore, this Tribunal in the case titled Sita Chaudhary v.

Haryana Telecom Ltd., 2023 SCC OnLine NCLAT 2212, while considering

the aforementioned principle, categorically held an approved resolution plan

can only be set aside when cogent grounds have been established in terms of

Section 61(3) of the Code.

33. It is apposite to note no averments have been made the Appellant in the

instant Appeal as to how its case falls under the grounds stipulated under

Section 61(3) of the Code.

34. Further the Appellant, being the dissenting financial creditor of the

Corporate Debtor, does not have the requisite locus to challenge the

Resolution Plan as duly approved by the members of the CoC. In DBS Bank

Ltd. v. Ruchi Soya Industries Ltd., (2024) 242 Comp Cas 441, wherein

the Hon'ble Supreme Court categorically held a dissenting financial creditor

does not have any say when the Resolution Plan has been approved by a two-

third majority of the CoC and a dissenting financial creditor can only object

to the distribution of the proceeds under the Resolution Plan, when the

proceeds are less than what the dissenting financial creditor would be entitled

to in terms of Section 53(1) of the Code. It is not the case of the Appellant that

it has been paid less than it is entitled to under Section 53(1) of the Code

under the Resolution Plan. As such, the Appellant is precluded from raising

objections to the Resolution Plan.

35. Thus the Appellant has failed to raise any cogent ground that may

warrant the setting aside of the Resolution Plan. Admittedly the Appellant

has duly participated in all the CoC Meetings till the approval of the

Resolution Plan and has indulged in extensive deliberations and negotiations 22

with regards to the terms of the Resolution Plan. Therefore, it is clear the

Appellant has preferred these Appeals as an afterthought.

38. Thus there is no merit in these two appeals and thus are dismissed.

39. Pending applications, if any, are also disposed of.

(Justice Yogesh Khanna) Member (Judicial)

(Mr. Ajai Das Mehrotra) Member (Technical) Dated:07-02-2025

BM