S. Boomadevi & Anr vs Prc International Hotels Pvt. Ltd. & Ors
- CitationCompany Appeal (AT) (Insolvency) No. 1212 of 2019
Ratio decidendi
The rule this decision rests on
A resolution plan approved by the Adjudicating Authority under section 31 of the Insolvency and Bankruptcy Code may be challenged in appeal under section 61(3) only on the grounds enumerated in that provision, namely contravention of any law in force, material irregularity in the exercise of powers by the resolution professional during the corporate insolvency resolution period, non-provision for operational creditors' debts in the manner specified by the Board, non-provision for insolvency resolution process costs in priority to other debts, or non-compliance with any other criteria specified by the Board. An allegation of collusion between parties, or of a consideration paid in cash to the erstwhile management, is not by itself a ground on which an approved resolution plan may be annulled. Where the appellant contends that the plan is not in accordance with law, the Appellate Tribunal will test that contention against the approving order itself: if the order records that the plan was approved by the requisite share of the Committee of Creditors and shows the distribution made to secured, unsecured financial and operational creditors, a bare assertion of non-compliance with the Code cannot be sustained.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
S. Boomadevi & Anr. ...Appellants
Versus
M/s. PRC International Hotels Pvt. Ltd. & Ors. ...Respondents
Present: For Appellant : Mr. Naveen Kumar and Mr. Shantanu Singh, Advocates
ORDER
13.11.2019 The Appellant - 'Shareholder' filed this appeal against an
order dated 27th August, 2019 passed by the Adjudicating Authority (National
Company Law Tribunal), Division Bench, Chennai. In the impugned order the
'resolution plan' submitted by 'Sai Baba Business solutions Pvt. Ltd.' has been
approved.
The learned counsel appearing on behalf of the Appellant submits that
there was a collusion between 7th & 8th Respondent and the erstwhile Managing
Director and Rupees Five Crores in cash has been approved. But such ground
cannot be accepted to annul a 'resolution plan' which can be challenged on the
following grounds:
"61 (3) An appeal against an order approving a resolution plan
under section 31 may be filed on the following grounds,
namely:--
2
(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."
The learned counsel for the Appellant submitted that the 'resolution plan'
is not in accordance with law but on bare perusal of the impugned order, we find
that the 'Committee of Creditors' had noticed that the plan is approved with
89.51% of the voting share. The Adjudicating Authority also noticed that the
'Resolution Plan' submitted by the 'Resolution Applicant - 'M/s. Sai Baba
Business Solutions Pvt. Ltd.' for a sum of Rs. 28,55,06,654/- and distribution
in favour of 'Secured' and 'Unsecured Creditors' have been shown therein. Even
'Unsecured Financial Creditors' have been provided with 27.53% of their claims
and 'Operational Creditors' claim was reached 70 to 80% as noticed by the
Adjudicating Authority.
In view of the aforesaid fact, it cannot be alleged that the plan is against
the provisions of the 'I&B Code'.
Company Appeal (AT) (Insolvency) No. 1212 of 2019 3
We find no merit in this Appeal. The Appeal is accordingly dismissed. No
costs.
[Justice S.J. Mukhopadhaya] Chairperson
[Justice Venugopal M.] Member (Judicial)
/ns/gc
Company Appeal (AT) (Insolvency) No. 1212 of 2019
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