National Company Law Appellate TribunalIifcl Mutual Fund vs Committee Of Creditors Of Gvr Infra & Ors on 2 November, 2020NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI\n          Company Appeal (AT) (Insolvency) No. 938 of 2020\n\nIN THE MATTER OF:\n\nIIFCL Mutual Fund                                                     ...Appellant\n\nVersus\n\nCommittee of Creditors of GVR Infra & Ors.                        ...Respondents\n\nPresent:\n   For Appellant:       Mr. Anand Varma, Mr. Dhairya Madan and Mr. Swagat\n                        Baruah, Advocates.\n   For Respondents: Mr. P. V. Dinesh and Mr. Ashwini Kumar Singha,\n                    Advocates for R-1.\n                        Mr. Robin Sirohi, Advocate for R-2.\n                        Ms. Shraddha Chaudhri, Mr. Aslam Ahmed, Mr.\n                        Sumant Nayak and Ms. Isha J. Kumar, Advocates for\n                        R-3.\n\n                                  ORDER(Through Virtual Mode)\n\n02.11.2020:    Appellant - 'IIFCL Mutual Fund', who had 3.94% voting share as\n\nmember of the Committee of Creditors in the Resolution Process of 'GVR Infra\n\nProjects Pvt. Ltd.' (Corporate Debtor) and who voted in favour of the approval of\n\nthe Resolution Plan submitted by 'UVARC' (Successful Resolution Applicant) has\n\nfiled the instant appeal assailing the approval of the Resolution Plan of the\n\nSuccessful Resolution Applicant as regards distribution mechanism.           The\n\nAppellant in terms of the impugned order is also aggrieved of dismissal of its\n\napplication being MA No. 99 of 2020 in C.P. No. 941/IB/2018 seeking revision\n\nof share proportion of the resolution fund amongst the Secured Financial\n\nCreditors equally which also came to be dismissed in terms of the same\n\nimpugned order.-2-2.    It is submitted on behalf of the Appellant that the revised resolution plan\n\nof Successful Resolution Applicant was approved by the Committee of Creditors\n\nwith 67.97% of the Members voting in favour of the Resolution Plan during the\n\n16th meeting of Committee of Creditors. It is submitted that the Appellant had\n\nraised objections to the allocation of Rs.135 Crores in favour of only four Secured\n\nCreditors resulting in inequitable distribution of the proceeds of the Resolution\n\nFund amongst the similarly placed five Financial Creditors. It is submitted that\n\nsuch allocation contravened provisions of Section 53 of Insolvency and\n\nBankruptcy Code, 2016 (in short the 'I&B Code'). It is further submitted that\n\nM.A. No. 99 of 2020 filed by the Appellant seeking revision of share proportion\n\nof Resolution Fund amongst the Secured Financial Creditors equally has been\n\narbitrarily dismissed in terms of the impugne d order on the ground that the\n\nAppellant had consented to approval of the revised Resolution Plan of the\n\nSuccessful Resolution Applicant and he cannot object to the distribution of\n\nproceeds of the Resolution Fund by the Resolution Professional as approved by\n\nthe Committee of Creditors.3.    After hearing Shri Anand Varma, Advocate representing the Appellant and\n\nwading through the impugned order and the record, we find that 'UVARC'\n\nemerged as Successful Resolution Applicant. Admittedly, the Appellant as a\n\nmember of Committee of Creditors, voted in favour of the approval of Resolution\n\nPlan of the Successful Resolution Applicant.       The Appellant appears to be\n\n\n\nCompany Appeal (AT) (Insolvency) No. 938 of 2020-3-aggrieved of allocation of Rs.135 Crores by the Resolution Professional in regard\n\nto uninvoked Bank Guarantees. From the record, it comes to fore that the total\n\nadmitted claims of the Financial Creditors of Rs.2271.08 Crores were to be\n\nsettled for an amount of Rs.352 Crores. This included claim for a total amount\n\nof 86,09,59,759/- submitted by Appellant which had been admitted by the\n\nResolution Professional.    It further appears that it is post -approval of the\n\nResolution Plan submitted by the Successful Resolution Applicant that the\n\nAppellant filed M.A. 99 of 2020 seeking direction from the Adjudicating Authority\n\nfor revision of share proportion of the Resolution Fund amongst the Secured\n\nFinancial Creditors equally. Reference is made to page 109-110 of the appeal\n\npaper book to demonstrate that the Appellant had raised the issue with the\n\nResolution Professional and the Resolution Professional had taken the stand that\n\nthe pay-out of Rs.135 Crores was essentially a contingent payment, regard being\n\nhad to certain eventualities. The Resolution Professional iterated that if the\n\ncontingencies do not arise, these amounts will not be required to be refunded/\n\nreleased. She further stated that such pay-out was a business decision to keep\n\nthe Corporate Debtor a going concern.        She further stated that this was a\n\nbusiness decision of the Committee of Creditors which cannot be commented\n\nupon by her.4.In'K. Shashidhar Vs. Indian Overseas Bank and Ors.' reported in\n\n2019 SCC Online SC 257, Hon'ble Apex Court observed that the decision in\n\n\n\nCompany Appeal (AT) (Insolvency) No. 938 of 2020-4-regard to approval or rejection of the Resolution Plan by the Committee of\n\nCreditors is taken collectively after due negotiation between the Financial\n\nCreditors who are constituents of the Committee of Creditors and express their\n\nopinion on the proposed resolution plan through the process of voting.        The\n\nproposed resolution plan is discussed threadbare and only thereafter the\n\nconstituents of the Committee of Creditors exercise their opinion to approve or\n\nreject the proposed resolution plan. The commercial/ business decision of the\n\nFinancial Creditors taken collectively or their individual opinions are not open to\n\nchallenge.In'Committee of Creditors of Essar Steel India Limited Vs.\n\nSatish Kumar Gupta and Others' (Civil Appeal No. 8766-67 of 2019)', (2019)\n\nSCC OnLine SC 1478, the Hon'ble Apex Court held that the limited judicial\n\nreview available under section 30(2) to the Adjudicating Authority and under\n\nSection 61(3) to the Appellate Tribunal cannot trespass upon the business\n\ndecision of the majority of the Committee of Creditors.The parameters of limited\n\njudicial review stand clearlylaid down inK. Shashidhar's case (supra).5.    Taking a holistic view of the provisions of the successful resolution plan\n\ninto account, the Adjudicating Authority was of the view that the same was not\n\nin conflict with the provisions of Section 30(2) of the I&B Code. Thus, the\n\nresolution plan in question came to be approved. As noticed elsewhere in this\n\njudgment, the claim of the Appellant as Financial Creditor has been admitted by\n\n\n\n\nCompany Appeal (AT) (Insolvency) No. 938 of 2020-5-the Resolution Professional during the Corporate Insolvency Resolution Process\n\nand the Appellant, as a constituent of the Committee of Creditors having voting\n\nright of 3.94%, has assented to the approval of the resolution plan of the\n\nSuccessful Resolution Applicant. After admission of Appellant's claim by the\n\nResolution Professional he can hardly have a grievance against the Resolution\n\nProfessional. Though, the Appellant appears to have raised an objection in\n\nregard to inclusion of uninvoked Bank Guarantees in the admitted claim, its\n\napproval of the resolution plan as an assenting Financial Creditor would estop\n\nit from questioning the same resolution plan, though only in regard to\n\ndistribution mechanism, which admittedly rests upon commercial wisdom of the\n\nCommittee of Creditors, who set apart amount of Rs.135 Crores as contingency\n\nfund to take care of certain eventualities which in itself was a business decision\n\nbased on commercial wisdom of Committee of Creditors binding all constituents\n\nof Committee of Creditors including the Appellant. This is astonishing that while\n\napproving the resolution plan as an assenting creditor at the culminating stage\n\nof insolvency resolution process, the Appellant should call in question the action\n\nof Resolution Professional, who had no role to play when the proposed Resolution\n\nPlan emanating from the Successful Resolution Applicant was put to vote by the\n\nCommittee of Creditors. The scope of judicial review under Section 61(3) of I&B\n\nCode being limited to grounds enumerated therein and no material irregularity\n\n\n\n\nCompany Appeal (AT) (Insolvency) No. 938 of 2020-6-having been shown to have occurred during the Corporate Insolvency Resolution\n\nProcess before approval of the Resolution Plan by the Committee of Creditors, we\n\nare of the considered opinion that the Appellant has no case. It is not the\n\nAppellant's grievance that he has been discriminated against as a dissenting\n\nFinancial Creditor or that his admitted claim has not been taken into\n\nconsideration while allocating the amount in terms of the distribution\n\nmechanism found perfectly in order by the Adjudicating Authority.6.      In the given facts and circumstances of the instant case, we are of the\n\nconsidered opinion that no case for judicial interference is made out. The appeal\n\nis accordingly dismissed at the very threshold stage being devoid of merit. There\n\nshall be no orders as to costs.[Justice Bansi Lal Bhat]\n                                                            Acting Chairperson\n\n\n                                                     [Justice Anant Bijay Singh]\n                                                               Member (Judicial)\n\n\n                                                      [Dr. Ashok Kumar Mishra]\n                                                             Member (Technical)\nam/gc\n\n\n\n\nCompany Appeal (AT) (Insolvency) No. 938 of 2020