Riddhi Siddhi Cluco Biols Limited vs Sunit Jagdishchandra Shah Resolution ...

[Arising out of the Impugned Order dated 27.11.2024 passed by the Adjudicating Authority, National Company Law Tribunal, Ahmedabad Bench-II in IA (Pan)/6(AHM)2024 in CP(IB)/9(AHM)2021]

In the matter of: M/s Riddhi Siddhi Gluco Biols Limited Through its Director 10, Abhishree Corporate Park, Nr. Swagat Bunglows BRTS Stand, Ambli-Boipal Road, Ahmedabad 380058 ...Appellant

Versus

Sunit Jagdishchandra Shah Resolution Professional of Shree Rajeshwaranand Paper Mills Limited. 801-802, 8th Floor, Abhijeet 1, Nr. Mithakhali Six Roads, Navrangpura, Ahmedabad 380009 Gujarat ...Respondents Present:

For Appellant : Mr. Ajay Kumar Tiwari, Advocate.

For Respondent : Ms. Honey Satpal, Mr. Nipun Singhvi, Ms. Pooja Singh, Advocates for Erstwhile RP.

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 27.11.2024 (hereinafter referred to as 'Impugned Order') passed by the Adjudicating

Authority (National Company Law Tribunal, Ahmedabad Bench-II) in IA No 6 of

2024 in CP(IB)/9(AHM)2021. By the impugned order, the Adjudicating Authority

has approved the resolution plan of the Corporate Debtor as submitted by the

Resolution Professional. Aggrieved by the impugned order, the present appeal

has been preferred by the Appellant-Operational Creditor.

2. The sequence of events which are necessary to be noticed for deciding the

present appeal are as follows:

 On 07.12.2022, the CIRP of the Corporate Debtor was initiated and IRP

was appointed.

 The IRP constituted the CoC comprising of two Secured Financial

Creditors and two Unsecured Financial Creditors. The first CoC meeting

was held on 13.01.2023.

 On 10.03.2023, the Form-G was published by the IRP inviting EOIs.

 On 05.06.2023, the CIRP period of 180 days had expired. The Resolution

Professional ("RP" in short) filed an application before the Adjudicating

Authority for extension of CIRP period for 90 days which was allowed on

19.06.2023.

 In the 14th CoC meeting held on 29.08.2023, the CoC resolved to extend

the CIRP period beyond 270 days. This was allowed by the Adjudicating

Authority on 06.10.2023.

 On 19.10.2023, the 17th CoC meeting directed the RP to file application

for extension of CIRP period as it wanted to discuss the resolution plan

submitted by Mercury Terra Firma.

Page 2 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025  On 30.12.2023, the Adjudicating Authority allowed extension of CIRP

period upto 10.12.2023, while also directing the RP to expedite the CIRP

process.

 The 19th CoC meeting held on 01.11.2023 decided to reissue Form-G.

Accordingly, the RP republished Form-G on 03.11.2023.

 The CoC considered the EOIs received in the 21st and 22nd CoC meetings.

Since the 23rd CoC meeting held on 04.12.2023 was still considering the

resolution plans and needed further time for consideration and the CIRP

period was expiring on 10.12.2023, the RP moved the Adjudicating

Authority for seeking further extension of CIRP for a period of 60 days.

 Extension of CIRP period upto 20.02.2024 was allowed on 08.01.2024 by

the Adjudicating Authority.

 On 29.01.2024 the CoC approved the resolution plan submitted by

Mercury Terra Firma which was approved with 97.36% voting.

 The Adjudicating Authority passed the impugned order on 27.11.2024

approving the resolution plan.

 Aggrieved by the impugned order approving the resolution plan, the

present appeal has been preferred by the Appellant- Operational Creditor.

3. Making his submissions, the Ld. Counsel for the Appellant submitted that

the Adjudicating Authority approved the resolution plan in violation of Section

12 of the IBC by allowing repeated extensions of CIRP even beyond 330 days.

Extension had been allowed beyond the period of 330 days without adequate

justification. Highlighting other procedural and material irregularities, it was

submitted that the RP had re-published the Form-G on 03.11.2023 only in the

Page 3 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025 newspapers and not on the website of IBBI which amounted to non-compliance

of Regulation 36-A(2) of the IBBI (Insolvency Resolution Process for Corporate

Persons) Regulations, 2016 ("CIRP Regulations" in short). It is also contended

that though the Appellant in the 17th CoC Meeting on 19.10.2023 had sought

valuation reports, the RP did not circulate the valuation report of the Corporate

Debtor either to the Appellant or to other members of the CoC but only furnished

bare figures of fair value and liquidation value. In the absence of valid and

detailed valuation reports, the CoC would have been handicapped to exercise its

commercial wisdom judiciously. However, the Adjudicating Authority has

overlooked these procedural irregularities in approving the resolution plan.

4. It was also pointed out that the RP had admitted claim of Rs 69,08,949/-

claimed by the Appellant and that the aggregate admitted claim of all Operational

Creditors put together worked out to Rs 18,34,60,969/-. However, as against a

composite claim of Rs 18.34 Cr. of the Operational Creditors, the Successful

Resolution Applicant has offered only Rs 60 lakhs for payment to Operational

Creditors. The resolution plan therefore prejudiced the interests of Operational

Creditors and amounted to non-compliance with Section 30(2)(b) of IBC.

5. Refuting the contentions raised by the Appellant, the Ld. Counsel for the

Respondent submitted that the resolution plan could have been challenged only

on the grounds laid down under Section 61(3) of the IBC but no such grounds

have been substantiated by the Appellant in the present appeal. On the

contention that the RP had only shared naked figures of fair value and

liquidation value instead of providing the detailed valuation report, it was

submitted that the 17th CoC meeting had after due deliberations recorded the

Page 4 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025 reasons for not sharing the full valuation report with the Appellant. In any case,

the Appellant being an Operational Creditor having no voting rights it was of no

consequence whether the detailed valuation report was placed before them or

not since it was the members of the CoC who were required to exercise their

commercial wisdom on the valuation reports placed before them. Moreover, the

Appellant had participated in the CoC meetings but not having raised any

objections earlier on this count cannot do so now. It was also contended that the

Adjudicating Authority was empowered to complete the resolution process by

extending the 330 day time-line because the resolution plan was at advanced

stage of consideration of the CoC and the CIRP timelines were getting over soon.

It was contended that the Appellant has failed to explain how it was aggrieved

by the resolution plan which had been approved by the Adjudicating Authority

after allowing extended time-lines. The Appellant had been a regular participant

in the CoC meetings but never opposed the extension of CIRP time-lines. Not

having raised such objections earlier, the Respondent cannot raise this issue at

this belated stage. It was also pointed out that the Respondent cannot complain

about the treatment meted out to the Operational Creditors in the resolution

plan since they had received more than the minimum entitlement in terms of

liquidation value which was kept at Nil for Operational Creditors. It was also

pointed out that when the resolution plan had been approved by the CoC with

97.36% voting, the Adjudicating Authority had no option to traverse beyond the

commercial wisdom of the CoC. In any case, it was vehemently contended that

the resolution plan already stands implemented and therefore cannot be

reversed when the Appellant has failed to make out any ground as to how the

resolution plan was non-compliant of Section 30(2) of IBC.

Page 5 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025

6. We have duly considered the arguments advanced by the Learned Counsel

for both the parties and perused the records carefully.

7. The short point for our consideration is whether there were material

irregularities in the exercise of powers by the RP in the CIRP proceedings;

whether the claims of the Operational Creditors did not receive their dues or

whether there was any contravention of the provisions of law.

8. Coming to the contentions raised by the Appellant with regard to material

and procedural irregularities, we find that the Appellant has assailed the

impugned order approving the resolution plan on the ground that the plan was

approved by the Adjudicating Authority after expiry of 330 days of CIRP period.

There is no doubt that in terms of Section 24(3)(c) of the IBC, it is the duty of the

RP to give notice to the Operational Creditors or their representatives regarding

the CoC meetings if the amount of their aggregate due is not less than 10% of

the debt. It is also well settled that such Operational Creditors whose aggregate

due is not less than 10% of the debt have a right to watch the proceedings of the

CoC and express their views in the meetings without however any right to vote.

In the present case, there is no denial of the fact that the Appellant received

notice of the CoC meetings from the RP. As the Appellant was kept informed of

the CoC meetings and records show their regular participation in such meetings,

they had full knowledge of the CIRP proceedings. They were therefore equally

aware of the extensions of CIRP time-lines approved by the CoC but these

extensions by the CoC were not questioned by them at the appropriate time. The

issue was neither agitated before the Adjudicating Authority at the right point of

time and is now being raked up belatedly.

Page 6 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025

9. Further when we look at the material on record, it is an undisputed fact

that the resolution plan in the present case was approved by the Adjudicating

Authority beyond 330 days. Be that as it may, we also notice that the

Adjudicating Authority had already approved the extension of CIRP period on

08.01.2024 which date was before 29.01.2024 when the plan was approved. In

the present case, the 23rd CoC meeting on 04.12.2023 had taken note of the fact

that it was in an advanced stage of considering the resolution plans before it and

since the extended CIRP period was getting expired on 10.12.2023, the CoC

approved seeking further extension of CIRP period. Clearly enough, CoC having

taken a considered decision in this regard, this constituted sufficient grounds

for the Adjudicating Authority to extend further time beyond 330 days for

completion of the CIRP process. Hence, the judgment of the Hon'ble Supreme

Court in Committee of Creditors of Essar Steel India Vs Satish Kumar

Gupta in Civil Appeal No. 8766-67 of 2019 which has been relied upon by the

Appellant does not come to their rescue since this judgment does not completely

rule out the possibility of CIRP extension beyond 330 days particularly so when

a short period is left for completion of CIRP.

10. In such circumstances, we are not persuaded to accept the contention of

the Appellant that the resolution plan could not have been approved by the

Adjudicating Authority since the CIRP timeline had stood exhausted.

11. Yet another perceived irregularity contended by the Appellant is that

though Regulation 35(2) of the CIRP Regulations makes it incumbent on the part

of the RP to provide fair value, liquidation value and valuation report to every

member of the CoC, the same was not done.

Page 7 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025

12. To appreciate the above allegation better, we need to look at the minutes

of the 17thCoC meeting wherein this issue was discussed in details which is as

extracted hereunder:

"Agenda 7) Any other matters relevant to the present case subject to approval of Chairman.

One of the CoC members i.e. Riddhi Siddhi GlucoBiols Limited represented by their authorised representative required and insisted the RP to provide them the Valuation Reports of the Corporate Debtor to share ahead with prospective buyers.

The RP informed that he can only share the Fair Value & Liquidation Value of the Corporate Debtor. The RP drew their attention to the regulations of the IBC, 2016 that as per the Regulation 35(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 which is quoted below:

"After the receipt of resolution plans in accordance with the Code and these regulations, the resolution professional shall provide the fair values 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 lass to itself or any other person and comply with the requirements under sub- section (2) of section 29"

The RP even informed the CoC members that such liquidation value and fair value were already sent and shared with all the CoC members. He further informed that CoC members also cannot share the values with anyone as they have provided the undertaking as per the Regulation 35(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Section 29 of the Insolvency & Bankruptcy Code, 2016."

13. When we look at the above 17th CoC meeting proceedings, we find that the

issue of sharing of the detailed valuation report had been raised therein by this

Appellant. We find that the CoC had considered this issue in the meeting and

minuted the reasons for only sharing the bare figures of the fair value and

Page 8 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025 liquidation value of the Corporate Debtor. Besides the fact that this matter was

duly considered, deliberated and decided upon by the CoC in its commercial

wisdom, it is also pertinent to note that since the Operational Creditor had no

right to vote in the meeting of the CoC, they cannot be said to have suffered from

any prejudice for not being provided with the valuation report. Whether the

detailed valuation report was placed before the Appellant or not was immaterial

since it was the members of the CoC who were required to exercise the

commercial wisdom on the valuation reports placed before them and not the

Appellant who did not have the right to exercise their vote. The bogey of non-

sharing of the detailed valuation report as a ground evidencing material or

procedural irregularity therefore lacks force.

14. Even the ground raised by the Appellant that Form-G had not been

published on the websites of the Corporate Debtor and IBBI lacks force of

contention since this is again another much belated complaint. It does not lie in

their mouth to agitate this matter now when they had slept over this issue all

along when the EoIs were received. Further, non-publication of Form-G has a

bearing on the interests of the potential resolution applicants who have not

raised any such complaint. The Appellant in their capacity as Operational

Creditor cannot rightfully claim that their interests were prejudicially affected on

this count. Moreover, it is ironical that on the one hand the Appellant has been

expressing concern over CIRP timelines having been crossed and yet a belated

complaint is being thrown up pushing the plan approval process into disarray.

15. Yet another contention of the Appellant was that the plan was wrongly

approved by the Adjudicating Authority without the plan conforming to the

statutory provision as contained in Section 30(2)(b) of the IBC. This argument

Page 9 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025 was premised on the ground that the Appellant as Operational Creditor had not

been allocated amount as per their entitlement under Section 30(2)(b) of IBC.

16. To decide on the tenability of the above argument, we may first notice the

provisions contained in Section 30(2)(b) of the IBC which reads as follows:

Section 30: Submission of resolution plan.

30. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan--

(a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor;

(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than-

(i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or

(ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section(1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor.

Explanation 1.-For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors.

17. From a plain reading of the above statutory provision, the entitlement of

an Operational Creditor is to receive the amount as provided under Section

30(2)(b) of IBC which is not less than the amount which the Appellant would

have been entitled to receive in the event of a liquidation of the Corporate Debtor

under Section 53 of the IBC. When we see the material on record, we find that

the fair value of the Corporate Debtor was Rs 45.85 Cr and the liquidation value

Page 10 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025 was Rs 33.16 Cr with no amount specified for Operational Creditors. On the

other hand, when we see the plan features at para 15 of the impugned order, the

plan provides for Rs. 60 lakhs for Operational Creditors which sum was clearly

more than the liquidation value which was their minimum entitlement. That

being so, the resolution plan cannot be said to be in dissonance with the

provisions of Section 30(2)(b) of IBC.

18. Furthermore, the resolution plan having been approved by more than 66%

of vote share by the CoC, such plan cannot be interfered with by the Adjudicating

Authority merely on the grounds that the Operational Creditors were being paid

Rs 60 lakhs at a time when no amount has been specified for Operational

Creditors in terms of liquidation value. We are of therefore of the considered view

that since the liquidation value in the present case is nil, the Operational

Creditors including the Appellant cannot have any grievance against the amount

being paid to them since the amount paid under the plan to the Operational

Creditors is clearly more than the liquidation value.

19. The resolution plan has been approved with a majority of 97.36% of vote

share. The plan having been approved by majority of votes, the Operational

Creditor is clearly bound by the approved resolution plan. We therefore are of

the considered view that the Adjudicating Authority did not commit any error

while approving the resolution plan after noting its satisfaction at para 26 of the

impugned order about the plan being in compliance of the provisions of the IBC

in terms of Section 30(2) of the IBC.

20. It may be useful to notice that Section 30 of the IBC which deals with

submission of Resolution Plan and sub-section (6) thereto states that "the

resolution professional shall submit the Resolution Plan as approved by the

Page 11 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025 Committee of Creditors to the Adjudicating Authority". In the present case, the

RP after approval of the plan by the CoC with 97.36% vote share filed an

application before the Adjudicating Authority seeking approval of the Resolution

Plan under Section 31 of the Code. Section 31 deals with approval of Resolution

Plan. Section 31(1) provides that if the Adjudicating Authority is satisfied that

the Resolution Plan as approved by the CoC under Section 30(4) meets the

requirements as referred to in Section 30(2), it shall by order approve the

resolution plan which shall be binding on the Corporate Debtor and other

stakeholders involved in the Resolution Plan. It is also pertinent to note that the

Adjudicating Authority has noted at para 20 of the impugned order that the CoC

has satisfied itself that the resolution plan meets the requirement of being viable

and feasible for revival of the Corporate Debtor. That the CoC also expressed its

satisfaction that the plan was in accordance with Section 30 of the IBC and

compliant with CIRP Regulations 38 has been noticed at para 18 of the impugned

order. Furthermore, the Adjudicating Authority has noticed at para 26 of the

impugned order that the plan was in accordance with Sections 30 and 31 of the

IBC and complies with Regulations 38 and 39 of CIRP Regulations.

21. Law is now well settled that the jurisdiction of the Adjudicating and

Appellate Authorities to interfere with approval of the resolution plan is limited.

The scope of judicial review is confined to the provisions contained in Section

30(2) of the IBC for the Adjudicating Authority and Section 30(2) read with

Section 61(3) for the Appellate Authority. There is only limited review which can

be exercised by the Adjudicating Authority or the Appellate Authority. There can

be no fetters on the commercial wisdom of CoC. The supremacy of commercial

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

Page 12 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025 Court in a catena of judgements - K. Sashidhar v. Indian Overseas Bank

(2019) 12 SCC 150 ; Committee of Creditors of Essar Steel India Limited

v. Satish Kumar Gupta (2020) 8 SCC 531; Maharashtra Seamless Limited

v. Padmanabhan Venkatesh (2020) 11 SCC 467; Kalpraj Dharamshi v.

Kotak Investment Advisors Limited, (2021) 10 SCC 401 and Ghanashyam

Mishra and Sons Private Limited through the Authorized Signatory v.

Edelweiss Asset Reconstruction Company Limited through the Director

(2021) 9 SCC 657.

22. So long the statutory provisions of the IBC and the CIRP Regulations

framed thereunder are complied with, it is the commercial wisdom of the

requisite majority of the CoC which is to negotiate and accept a resolution plan.

Once all the mandatory requirements have been duly complied with and taken

care of, judicial review cannot be extended to analyse and look into the

dissatisfaction evinced by any particular creditor or stakeholder. The

Adjudicating Authority cannot substitute its views with the commercial wisdom

of the CoC nor deal with the merits of Resolution Plan unless it is found it to be

contrary to the express provisions of law and against the public interest. There

is neither any material irregularity nor contravention of any provisions of law by

the CoC which has been justifiably substantiated by the Appellant. In the

present case when no valid grounds have been made out to challenge the

approval of the resolution plan, the legislative fiat of the IBC that the

Adjudicating Authority cannot trespass upon the business decision of the CoC

holds ground. We have no doubts in our mind that the plan has been rightly

approved by the Adjudicating Authority.

Page 13 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025

23. In result, we do not find any good ground to interfere with the impugned

order approving the resolution plan. There is no merit in the appeal. The Appeal

is dismissed. No costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

Place: New Delhi Date: 07.03.2025

Abdul/Harleen

Page 14 of 14 Company Appeal (AT) (Insolvency) No. 187 of 2025