Madhukar Shetty vs Bank Of Baroda & Ors

[Arising out of order dated 20.12.2023 passed by the Adjudicating Authority, National Company Law Tribunal, Mumbai Bench-I, Mumbai in C.P. (IB) No. 2445 OF 2019]

In the matter of:

Shri Madhukar Shetty Ex-Director of Genesis Resorts Pvt. Ltd., The Corporate Debtor, Having Office At: 302-B, Kadamgiri Complex, Hanuman Road, Vile Parle [East], Mumbai-400057 ...Appellant Versus

1. BANK OF BARODA Zonal Stressed Assets Recovery Branch, Meher Chambers, Ground Floor, Sundarlal Behl Marg, Ballard Estate, Mumbal- 400001 Through its Branch Manager ....Respondent No.1 2. Vijay Pitamber Lulla Resolution Professional of the Corporate Debtor Having its Office at: 501, Arcadia, 195, Nariman Point, Mumbai- 400021.

AND ALSO AT: 201, Satchitanand Building, 12 Road, Opp. Ram Mandir, Khar [West], Mumbai- 400052. ....Respondent No.2 Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 1 of 17 3. COMMITTEE OF CREDITORS (Of Genesis Resorts Pvt. Ltd.); Through its Authorized Representative Bank of Baroda Zonal Stressed Assets Recovery Branch, Meher Chambers, Ground Floor, Sundarlal Behl Marg, Ballard Estate, Mumbai-400001. ....Respondent No.3

Present :

For Appellant : Mr. Siddhartha Chowdhury, Advocate. For Respondents : Mr. Abhijeet Sinha, Sr. Advocate with Mr. Anuj Tiwari, Mr. Saikat Sarkar, Mr. Soumya Kumar and Ms. Monika, Advocates for R2. Ms. Pooja Mahajan, Mr. Savar Mahajan, Ms. Shreya Mahalwar, Advocates for R-1&3. Mr. Kaustubh Prakash and Ms. Prachi Bhatia, Advocates for SRA.

JUDGMENT

[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

20.12.2023 (hereinafter referred to as 'Impugned Order') passed by the

Adjudicating Authority, National Company Law Tribunal, Mumbai Bench-I in

IA-1177/2021 and IA-1768/2021 in CP (IB) No. 2445 of 2019. By the

impugned order, the Adjudicating Authority approved the resolution plan of

the Successful Resolution Applicant ('SRA' in short) filed by the RP vide I.A.

1177/2021 and dismissed the I.A. 1768 of 2021 filed by the ex-Director of the

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 2 of 17 Corporate Debtor objecting to the approval of the resolution plan of the SRA.

Aggrieved by this order, the present appeal has been preferred by the ex-

Director of the Corporate Debtor-Appellant.

2. Coming to the factual matrix of the present case, it has been brought

to our notice that the Corporate Debtor-Genesis Resorts Pvt. Ltd. had availed

a loan of Rs.149.05 cr from the Financial Creditor-Bank of Baroda during the

years 2012 to 2014. The loan facility had been granted for construction of a

hotel on a plot of land at Vile Parle near the Mumbai Airport. The Corporate

Debtor applied for restructuring of the credit facilities which was allowed by

Financial Creditor-Bank of Baroda on 18.02.2015. However, the Corporate

Debtor failed to repay the outstanding loan to the Bank of Baroda leading to

classification of their account as NPA on 30.11.2016. The Bank of Baroda

thereafter approached the Adjudicating Authority for initiating Corporate

Insolvency Resolution Process ('CIRP' in short) of the Corporate Debtor for

realisation of a total debt amounting Rs.231.09 cr comprising of Rs.149.05 cr

as principal and Rs. 82.04 cr as interest. The Adjudicating Authority admitted

the Section 7 petition on 11.12.2019 admitting the Corporate Debtor into

CIRP.

3. Carrying the CIRP process forward, the Resolution Professional ('RP' in

short) invited EOI by issuing a public notice in Form-G on 28.01.2020 in

terms of Regulation 36A(1) of the IBBI (Insolvency Process Regulations for

Corporate Persons) Regulations,2016 ('CIRP Regulations' in short). The

timelines for submission of EOI got extended from time to time with the

approval of the Committee of Creditors ('CoC' in short) till January, 2021. The Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 3 of 17 RP also appointed Registered Valuers for valuation of the assets of the

Corporate Debtor and the first CoC meeting held on 10.01.2020 had approved

the appointment of these valuers. Basis their valuation reports dated

09.07.2020, 08.09.2020 and 09.10.2020, the average liquidation value of the

Corporate Debtor was determined as Rs.83.52 Cr. and the fair value fixed at

Rs.118.88 Cr.

4. Pursuant to the issue of Form-G, 17 EOIs were received. However, only

two resolution plans were finally received by the RP. M/s Finquest Solutions

Pvt. Ltd.-SRA submitted its plan which was approved by the CoC in its 10th

meeting with 100% vote share following which the RP filed IA No. 1177 of

2021 on 05.04.2021 before the Adjudicating Authority for approval of the

Resolution Plan. The Appellant - ex Director of the Corporate Debtor filed I.A.

No. 1768 of 2021 before the Adjudicating Authority objecting to the approval

of the resolution plan of the Corporate Debtor as submitted by the SRA. The

Adjudicating Authority rejected I.A. No. 1768 of 2021 filed by the Appellant

and approved the resolution plan of the SRA. Assailing the impugned order,

the present appeal has been preferred by the Appellant - ex Director of the

Corporate Debtor.

5. We have heard Mr. Siddhartha Chowdhury, Learned Counsel for the

Appellant who while making his submissions stated that the resolution plan

submitted by the RP suffered from major irregularities. One such major

irregularity according to the Appellant is the under-valuation of the assets of

the Corporate Debtor. It was submitted that the RP had published an

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 4 of 17 incomplete Information Memorandum which failed to capture the correct

value of the assets of the Corporate Debtor. This led to arriving at a very low

liquidation value. Thus, it was contended that the RP had conducted the CIRP

process without ensuring maximization of the value of assets of the Corporate

Debtor which goes against the grains of IBC.

6. Pointing out another alleged grave irregularity, it is submitted that the

SRA is a non-banking non-deposit financial company on which the Securities

and Exchange Board of India ('SEBI' in short) had imposed fine. It was also

pointed out that the SRA is a company under the umbrella of M/s Finquest

Group promoted by one Sh. Bharat Patel who had failed to make necessary

disclosure under the prohibition of insider trading norms on several

occasions. Thus, when the Bharat Patel Group had violated the norms set out

under the SEBI Act and had been debarred from transacting in the market,

the RP had failed and neglected in carrying out necessary steps to ascertain

the eligibility of the present SRA while accepting their resolution proposal.

7. It has also been contended by the Appellant that the RP had conducted

the entire CIRP Process without taking into confidence the Appellant and

without seeking documents/permissions obtained by the Corporate Debtor

for running its business activities.

8. We have heard Mr. Abhijeet Sinha, Learned Sr. Advocate representing

the RP and Ms Pooja Mahajan representing the CoC and Bank of Baroda as

the sole member of the CoC. Mr. Kaustubh Prakash, Learned Counsel for SRA

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 5 of 17 was also heard. Since their line of arguments overlap, for reasons of

convenience, we are clubbing them together. Refuting the contentions raised

by the Appellant, the Learned Counsels for the Respondents submitted that

the IBC provides a well-defined mechanism to be followed for valuation of the

Corporate Debtor as laid down in the CIRP Regulations. The RP adhered to

the relevant CIRP Regulations and got the valuation duly conducted by IBBI

registered valuers for determining an estimate of fair value and liquidation

value of the Corporate Debtor as on the insolvency commencement date.

9. The Learned Counsel for Respondents also vehemently contended that

the SRA was not disqualified under Section 29-A of IBC. It was pointed out

that the allegation made by the Appellant that the SRA was ineligible for

making submission of Resolution Plan owing to imposition of penalty by SEBI

against the promoters of SRA was misconceived. The alleged imposition of ban

by SEBI on the promoters of the SRA lacks basis and does not hold good

because the Securities Appellate Tribunal had set aside the orders of the

SEBI. It has also been stated that the RP had conducted an independent due

diligence of the SRA before coming to the conclusion that the SRA was eligible

to submit the resolution plan for the Corporate Debtor. It has also been

pointed out that the Adjudicating Authority has taken note of the fact that the

resolution plan of the SRA has been successfully implemented and the CIRP

of the Corporate Debtor has been closed.

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

Counsels for both the parties and perused the records carefully.

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 6 of 17

11. The first point for our consideration is whether the CIRP process got

marred by irregularities on account of incorrect valuation exercise allegedly

conducted by the RP. It is the case of the Appellant that the assets of the

Corporate Debtor have been under-valued. A property which could have

fetched more than Rs.200 cr in the current market situation is being sold at

a much lower valuation causing loss of public money. It was added that the

Bank of Baroda had conducted valuation of the said property on two earlier

occasions in 2015 and 2019. In 2015, the valuation conducted by A.V. Shetty

& Associates showed the realisable value as Rs.413.02 cr, while in 2019 the

valuation conducted by Kakode & Associates showed the market value of the

property to be Rs.142.49 cr as on 22.01.2019. It is also submitted that the

valuation of the said property in the Balance Sheet of the Corporate Debtor

for 2018-19 stood at Rs.210.10 cr. Even as per the Ready Reckoner Rate of

the Registrar's Office, which is otherwise deemed to be the minimum rate of

property transactions notified by the Government, the price of the said

property was valued at Rs.260 cr. Furthermore, keeping in view the prime

location of the said property, the valuation should have been much more than

what had been stated by the SRA. It was incumbent upon the RP to consider

the balance sheets of the Corporate Debtor and the earlier valuation reports

obtained by the Bank of Baroda before confirming the valuation obtained from

the two registered valuers appointed by the RP. It is their contention that the

RP conducted the CIRP process in a mischievous and arbitrary manner with

a view to sell the assets of the Corporate Debtor at an under-valued price.

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 7 of 17

12. At this juncture, we need to analyse as to whether the process of

valuation contemplated under the relevant CIRP Regulations were duly

followed or not by the RP. CIRP Regulation 27 requires the RP to appoint two

registered valuers to determine the fair value and liquidation value of the

Corporate Debtor in accordance with CIRP Regulation 35. We may quickly

run our eyes through CIRP Regulation 35 which is to the effect:

"35. Fair value and Liquidation value.

(1) Fair value and liquidation value shall be determined in the following manner:-

(a) the two registered valuers appointed under regulation 27 shall submit to the resolution professional an estimate of the fair value and of the liquidation value computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor;

(b) if in the opinion of the resolution professional, the two estimates of a value are significantly different, he may appoint another registered valuer who shall submit an estimate of the value computed in the same manner; and

(c) the average of the two closest estimates of a value shall be considered the fair value or the liquidation value, as the case may be.

(2) After the receipt of resolution plans in accordance with the Code and these regulations, the resolution professional shall provide the fair value and the liquidation value to every member of the committee in electronic form, on receiving an undertaking from the member to the effect that such member shall maintain confidentiality of the fair value and the liquidation value and shall not use such values to cause an undue gain or undue loss to itself or any other person and comply with the requirements under sub-section (2) of section 29:

(3) The resolution professional and registered valuers shall maintain confidentiality of the fair value and the liquidation value.".

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 8 of 17

13. From a plain reading of the above CIRP Regulations, it is clear that only

the valuation conducted by IBBI registered valuers appointed post the

admission of Corporate Debtor into CIRP is required to be considered by the

CoC. Any valuation conducted in the past by any entity for whatever purposes

prior to the initiation of CIRP does not have any relevance for the purposes of

CIRP of the Corporate Debtor.

14. The Learned Counsel of the Respondent No.1 has contended that claim

of the Appellant that the real value of the assets is higher is only a ruse to

derail the CIRP of the Corporate Debtor and placed reliance on the judgement

of the Hon'ble Supreme Court in M.K. Rajagopalan v. Dr. Periasamy Palani

Gounder & Or (2024) 1 SCC 42 to contend that once the members of CoC

are satisfied with and have endorsed the process of valuation, allegations of

irregularities in the valuation of assets raised by the ex-Director of the

Corporate Debtor needs to be discounted. The relevant extracts of the

Gounder judgment supra in the context of valuation process undertaken

under CIRP Regulations 27 and 35 is as below:

"135. It has rightly been contended on behalf of the appellants that the members of CoC were provided with fair value and liquidation value after obtaining a confidentiality undertaking. We have reproduced hereinbefore all the material parts of the minutes of the meetings of CoC and it is at once clear that the members of CoC were fully satisfied with and endorsed the process of valuation and even re-evaluation as undertaken by the resolution professional. Particularly, the minutes of second, fourth, sixth and seventh CoC meetings stand testimony to the fact that the requirements of Regulation were scrupulously followed and complied with and there had not been any doubt in CoC as regards the process of valuation as also supplying of fair and liquidation value to the members of CoC. The detailed findings of the adjudicating authority in this regard (reproduced in para 60 hereinabove) make it clear that the adjudicating authority independently applied its mind to the process of valuation and presentation of the matter to CoC. Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 9 of 17 Rejection of all the objections in that regard by NCLT, called for no interference.

136. The Appellate Tribunal appears to have unnecessarily and rather unjustifiably presumed that there had been blatant statutory violations and irregularities. Even if certain issues were raised in some of the meetings of CoC as regards the process of valuation, the clarifications from the resolution professional and the steps taken by him for valuation and re-valuation had been to the satisfaction of CoC....."

15. When we apply the ratio of the Gounder judgment supra in the present

facts of the case, we find that the CIRP Regulations 27 and 35 have been

scrupulously followed in that two registered valuers were appointed to

compute the value of the assets in accordance with internationally accepted

valuation standards. Paragraph 22 of the impugned order has also noted that

the 1st CoC meeting held on 10.01.2020, approved the appointment of three

registered valuers viz. Kakode Associates Consulting Pvt. Ltd. for Plant &

Machinery, Land & Building and Financial Assets; Mr. Farag Sheth for Plant

& Machinery and Land & Building; and Pinakin Shah & Company for

Financial Assets. The Registered Valuers submitted their reports on

09.07.2020, 08.09.2020 and 09.10.2020 respectively basis which the average

liquidation value of the Corporate Debtor was determined as Rs.83.52 cr and

the average fair value of the Corporate Debtor was determined as Rs.118.88

cr. The valuation report was also shared with the CoC by the RP. When we

see the findings of the Hon'ble Supreme Court in the Gounder judgement

supra, we are inclined to hold the view that the findings therein are squarely

applicable in the present factual matrix and that the allegation of irregularity

raised by the Appellant lacks merit. Once a valuation report is submitted by

the RP to the CoC and the CoC is satisfied with the same, the Adjudicating

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 10 of 17 Authority cannot go into the question of valuation of the assets conducted by

the RP during the CIRP. The perception of the Appellant as to real value of the

Corporate Debtor cannot be a yardstick or a factor to reject the resolution

plan which has been approved by the CoC with 100% voting share. Hence,

the reliance placed by the Appellant on pre-CIRP valuations conducted by

Bank of Baroda in the past is misconceived and misplaced.

16. It was also submitted by the Learned Counsel for the Respondent No.1

that the value offered in the resolution plan is not required to be higher than

the fair or liquidation value of the Corporate Debtor as has been wrongly

asserted by the Appellant. In support of their contention, reliance has been

placed on the judgement of the Hon'ble Apex Court in Maharashtra

Seamless Ltd. vs. Padmanabhan Venkatesh & Ors. (2020) 11 SCC 467

which has held:

"26. No provision in the Code or Regulations has been brought to our notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in Clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This point has been dealt with in the case of Essar Steel (supra). We have quoted above the relevant passages from this judgment.

27. It appears to us that the object behind prescribing such valuation process is to assist the CoC to take decision on a resolution plan properly. Once, a resolution plan is approved by the CoC, the statutory mandate on the Adjudicating Authority under Section 31(1) of the Code is to ascertain that a resolution plan meets the requirement of sub-sections (2) and (4) of Section 30 thereof. We, per se, do not find any breach of the said provisions in the order of the Adjudicating Authority in approving the resolution plan."

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 11 of 17

17. This brings us to a related submission made by the Appellant that the

RP had avoided furnishing a copy of the resolution plan approved by the CoC

to the Appellant in spite of requests made for furnishing copy of the resolution

plan and relevant minutes of the meeting of the CoC. However, when we see

the pleadings made by the Appellant in I.A. No. 1768 of 2021 filed before the

Adjudicating Authority as placed at page 541-556 of Appeal Paper Book ('APB'

in short) we find that the Appellant in para-8 therein has himself admitted

that their request for getting a copy of the approved resolution plan was

fulfilled by the RP on the directions of the Adjudicating Authority. Further in

para-5 therein, it has also been submitted as here-under:

"The Applicant was thereafter invited by Respondent no.2 to attend the meetings of the CoC, which were duly attended by the Applicant. The Applicant while attending the said meetings of the CoC offered its complete cooperation to the CoC as well as the RP, in the interest of the creditors of the Corporate Debtor. The Applicant with an intent to assist Respondent No. 2 and the CoC provided complete information and clarification with regards to the Corporate Debtor as and when requested by Respondent No. 2 as well as the Respondent No.3."

18. Admittedly therefore, the Appellant was provided copy of the resolution

plan as well as minutes of the CoC meeting and even allowed to attend the

CoC meetings. Hence, the allegations raised by the Appellant of the RP not

inviting the Appellant to attend the CoC meetings and not being provided with

the resolution plan is frivolous and self-contradictory and therefore deserves

scant regard. It is clear therefore that the Appellant has unjustifiably claimed

that there has been statutory violations and irregularities in the valuation

process conducted by the RP.

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 12 of 17

19. Coming to the second limb of argument that the SRA attracted Section

29-A(f) of the IBC and was not eligible to be a resolution applicant, we find

that this aspect has been holistically dealt at length by the Adjudicating

Authority in the impugned order. It may be useful to notice the relevant

paragraphs of the impugned order which are as extracted below:

"14. At the outset, we find that the Resolution Professional has filed a declaration certifying the compliance of Sec. 29A and this has also been verified by an independent agency, M/s_ We further find that on the date of the submission of the Resolution Plan, there was no order from SEBI banning the Patel family members. Further, the Orders passed by SEBI subsequent to the filing of the plan have either been set aside or stayed by the Securities Appellate Tribunal. It is pertinent to note that the disqualification qua the Prospective Resolution Applicant has to be examined with respect to the date of submission of the Plan. Accordingly, we do not find any substance in the contentions of Applicant.

15. We find that the Plan has been passed by the CoC by requisite majority in its commercial wisdom and this Bench has limited jurisdiction to interfere in the exercise of such discretion. The Applicant has not brought on record any deviation from the RFRP or Evaluation Matrix and has also not pointed out any malafide in the exercise of commercial wisdom by the CoC or carrying of the process by RP. It is an undisputed fact that valuation of the Corporate Debtor was carried out by IBBI registered valuers in accordance with the Code and the SRA has presented the Plan being conscious of the Regulations relating to height and operation of Hotel. We are of considered view that we ought not to interfere in the decision making process as regards viability if the CoC has considered the financial plan submitted by SRA to be a viable proposition.

30. The RP issued information memorandum, evaluation matrix and Request For Resolution Plan ("RFRP") to the PRAs to enable them to submit a viable Resolution Plan for the Corporate Debtor.

31. Pursuant to the Request for Resolution Plan, Finquest Financial Solutions Private Ltd. and Jaldhara Properties and Trading Private Limited gave their Resolution Plans. However, since the CoC decided to extend the time for giving EOI & Resolution Plan, both the parties withdrew their Resolution Plans and agreed to give revised Resolution Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 13 of 17 Plans. On 02.02.2021 the RP received 2 Resolution Plans viz. Finquest Financial Solutions Private Limited and Mr. Jiten K Ajmera. Both the Applicants were found to be eligible."

(Emphasis supplied)

20. We find no reasons to disagree with the Adjudicating Authority that the

alleged imposition of ban by SEBI on the promoters of the SRA does not hold

good because the Securities Appellate Tribunal had set aside the orders of the

SEBI. The RP had also appointed M/s Mazars India LLP for conducting an

independent due diligence of the SRA. This independent third-party entity in

its report had confirmed that the promoters of the SRA had complied with the

orders of SEBI and that the SRA was eligible to submit the resolution plan for

the Corporate Debtor. Thus, in our considered view even on this count the

Appellant has hopelessly failed to validate their contention of alleged

irregularity.

21. More importantly, we find that the CoC has approved the resolution

plan with 100% vote share and prior to the approval of the plan, the valuation

exercise conducted by the registered valuers were also brought to the

knowledge of the CoC. All these facts have been duly noted and considered by

the Adjudicating Authority as may be seen at paras 33 and 34 of the impugned

order which is as reproduced below:

"33. The RP states that Finquest Financial Solutions Private Ltd and Mr. Jiten K Ajmera submitted Resolution Plan along with Section 29A Affidavits, Undertakings and other necessary documents as per RFRP on 02.02.2021. Both the Resolution Plans were opened in the 8th COC meeting held on 04.02.2021. The said Resolution Plans were discussed by the COC members in the 8th and 9th CoC meetings held on 04.02.2021 and 15.02.2021 respectively. Based on the discussions, the said PRAs were requested to revise their Resolution Plans and submit the same by 19.02.2021. Although, the PRAs submitted revised Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 14 of 17 Resolution Plans by 19.02.2021, based on the discussions with the RP and COC members, the same were revised again and final Resolution Plans were received on 08.03.2021 by the Applicant. The Applicant placed the said final Resolution Plans submitted by Finquest Financial Solutions Private Ltd and Mr. Jiten K Ajmera before the COC members in its l0th CoC meeting held on 10.03.2021 for discussion, wherein, the COC members, requested the RP to put both the Resolution Plans for e- voting.

34. The agenda for approval of both the above Resolution Plans was put for e-voting, which was kept open from 15.03.2021 till 31.03.2021. Bank of Baroda holding 100.00% voting share voted in favour of Resolution Plan submitted by Finquest Financial Solutions Private Ltd. and also approved filing of the Resolution Plan of Finquest Financial Solutions Private Ltd, Successful Resolution Applicant ("SRA"), before this Hon'ble Tribunal for approval u/s 30(6) of the Code on 31"March, 2021."

22. It is the case of the Respondents that it is not for the Adjudicating

Authority to consider or evaluate on merits the rationale underlying the

commercial decision of the CoC. While considering a resolution plan under

Section 31 of the IBC, the jurisdiction of the Adjudicating Authority is

circumscribed by Section 30(2) of IBC and it cannot analyse or evaluate or sit

on judgment over the commercial decision of the CoC. We do not find any

plausible grounds to differ with the Respondents in the light of the judgement

of the Hon'ble Supreme Court in Ngaitlang Dhar v. Panna Pragati

Infrastructure Private Limited in CA No. 3665-3666 of 2020 wherein it

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.

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 15 of 17 It has been held that the opinion expressed by the CoC after due deliberations in the meetings through voting, 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 been consistently reiterated in a catena of judgments of this Court, including:

(i) K. Sashidhar v. Indian Overseas Bank

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

(iii) Maharashtra Seamless Limited v. Padmanabhan Venkatesh,

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

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

(Emphasis supplied)

23. When the CoC has approved the Resolution Plan by 100% voting share

after considering its feasibility and viability, such decision of CoC is a

commercial decision. There can be no fetters on the commercial wisdom of

the CoC. It is settled law that commercial wisdom of CoC in approving the

Resolution Plan is not to be interfered in the exercise of jurisdiction of judicial

review either by the Adjudicating Authority or by this Tribunal in the exercise

of its appellate powers. 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. The

Adjudicating Authority can reject the resolution plan only when there is non-

compliance of Section 30(2) of IBC. There are no adequate grounds shown or

material placed on record by the Appellant as to how the plan does not

conform to Section 30(2) of IBC.

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 16 of 17

24. Having regard to the foregoing discussion, we are of the view that the

Adjudicating Authority did not err in approving the resolution plan of the SRA.

We are also of the considered view that the Adjudicating Authority did not

commit any error in rejecting the interlocutory application of the Appellant

objecting to the approval by the CoC of the resolution plan of the SRA. In

result, the impugned order does not warrant any interference. Appeal being

devoid of merit is dismissed. No order as to costs.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical)

[Mr. Arun Baroka] Member (Technical)

Place: New Delhi Date: 02.07.2024 Harleen Kaur

Company Appeal (AT) (Insolvency) No. 739-740 of 2024 Page 17 of 17