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Case Number
Attorney(S)
  • Mr. Alok Dhir, Ms. Varsha Banerjee, Mr. Milan Singh Negi, Mr. Kunal Godhwani and Ms. Juhi Bhambhani, Advocates ;
  • Mr. Ramji Srinivasan, Senior Advocate with Mr. Bishwajit Dubey and Ms. Srideepa Bhattacharya, Advocates ;
  • Mr. V. Seshagiri, Mr. Siddharth Sachar, Ms. Shubhangi Mehrish, Mr. Shreyas S. Johri, Mr. Anchit Tripathi and Karan Bhambri, Advocates ;
  • Mr. Ramji Srinivasan, Senior Advocate with Mr. Sanjay Kapur, Ms. Megha Karnwal, Mr. Harshal Narayan and Mr. Nikhil Ramdev, Advocates ;
  • Mr. Amit Sibal, Mr. Arun Kathpalia and Mr. Ratnako Banerjee, Senior Advocate assisted by Mr. Sameer Rohatgi and Mr. Akshit Pradah, Advocartes No. 1
  • Mr. Harin Rawal, Senior Advocate with Mr. Sanjay Kapur and Ms. Megha Karnwal, Advocates for SBI
  • Ms. Anusuya Salwan, Ms. Nikita Salwan and Mr. Kunal Kohli, Advocates
  • Ms. Anusuya Salwan, Ms. Nikita Salwan and Mr. Kunal Kohli, Advocates No. 3
  • Mr. Saraswata Mohapatra, Advocate ;
  • Ms. Anusuya Salwan, Ms. Nikita Salwan and Mr. Kunal Kohli, Advocates
  • Mr. Saraswate Mohapatra, Advocate for Employees
  • Ms. Anusuya Salwan, Ms. Nikita Salwan and Mr. Kunal Kohli, Advocates
  • Mr. Mukesh and Mr. Debal Banerjee, Senior Advocates with Ms. Reema Khurana, Mr. Kartik Rathi, Advocates for Allahabad Bank
  • Mr. Amit Sibal, Mr. Arun Kathpalia and Mr. Ratnako Banerjee, Senior Advocate assisted by Mr. Sameer Rohatgi and Akshit Pradhan, Advocates for MBL
  • Mr. Amit Sibal and Mr. Arun Kathpalia, Senior Advocate assisted by Mr. Sameer Rohatgi, Advocate for MBL;
  • Mr. Harin P. Raval, Senior Advocate with Mr. Sanjay Kapur, Mr. Kauser Hussain and Ms. Megha Karnwal, Advocates for SBI
  • Mr. Amit Sibal, Mr. Arun Kathpalia and Mr. Ratnako Banerjee, Senior Advocate assisted by Mr. Sameer Rohatgi, Advocate for MBL;
Judges
  • S.J. Mukhopadhaya
  • Chairperson
  • Bansi Lal Bhat, Member (Judicial)
Acts
  • SECTION 7 INSOLVENCY AND BANKRUPTCY CODE 2016
  • sub-section (5) of Section 60 of the I&B Code,
  • sub-section (2) of Section 30 of the I&B Code.
  • Section 29A(h) of the I&B Code.
  • sub-section (3) of Section 12,
  • sub-section (4) of Section 30
  • sub-section (2) of Section 30,
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. Alok Dhir, Ms. Varsha Banerjee, Mr. Milan Singh Negi, Mr. Kunal Godhwani and Ms. Juhi Bhambhani, Advocates ;
  • Mr. Ramji Srinivasan, Senior Advocate with Mr. Bishwajit Dubey and Ms. Srideepa Bhattacharya, Advocates ;
  • Mr. V. Seshagiri, Mr. Siddharth Sachar, Ms. Shubhangi Mehrish, Mr. Shreyas S. Johri, Mr. Anchit Tripathi and Karan Bhambri, Advocates ;
  • Mr. Ramji Srinivasan, Senior Advocate with Mr. Sanjay Kapur, Ms. Megha Karnwal, Mr. Harshal Narayan and Mr. Nikhil Ramdev, Advocates ;
  • Mr. Amit Sibal, Mr. Arun Kathpalia and Mr. Ratnako Banerjee, Senior Advocate assisted by Mr. Sameer Rohatgi and Mr. Akshit Pradah, Advocartes No. 1
  • Mr. Harin Rawal, Senior Advocate with Mr. Sanjay Kapur and Ms. Megha Karnwal, Advocates for SBI
  • Ms. Anusuya Salwan, Ms. Nikita Salwan and Mr. Kunal Kohli, Advocates
  • Ms. Anusuya Salwan, Ms. Nikita Salwan and Mr. Kunal Kohli, Advocates No. 3
  • Mr. Saraswata Mohapatra, Advocate ;
  • Ms. Anusuya Salwan, Ms. Nikita Salwan and Mr. Kunal Kohli, Advocates
  • Mr. Saraswate Mohapatra, Advocate for Employees
  • Ms. Anusuya Salwan, Ms. Nikita Salwan and Mr. Kunal Kohli, Advocates
  • Mr. Mukesh and Mr. Debal Banerjee, Senior Advocates with Ms. Reema Khurana, Mr. Kartik Rathi, Advocates for Allahabad Bank
  • Mr. Amit Sibal, Mr. Arun Kathpalia and Mr. Ratnako Banerjee, Senior Advocate assisted by Mr. Sameer Rohatgi and Akshit Pradhan, Advocates for MBL
  • Mr. Amit Sibal and Mr. Arun Kathpalia, Senior Advocate assisted by Mr. Sameer Rohatgi, Advocate for MBL;
  • Mr. Harin P. Raval, Senior Advocate with Mr. Sanjay Kapur, Mr. Kauser Hussain and Ms. Megha Karnwal, Advocates for SBI
  • Mr. Amit Sibal, Mr. Arun Kathpalia and Mr. Ratnako Banerjee, Senior Advocate assisted by Mr. Sameer Rohatgi, Advocate for MBL;
Judges
  • S.J. Mukhopadhaya
  • Chairperson
  • Bansi Lal Bhat, Member (Judicial)
Acts
  • SECTION 7 INSOLVENCY AND BANKRUPTCY CODE 2016
  • sub-section (5) of Section 60 of the I&B Code,
  • sub-section (2) of Section 30 of the I&B Code.
  • Section 29A(h) of the I&B Code.
  • sub-section (3) of Section 12,
  • sub-section (4) of Section 30
  • sub-section (2) of Section 30,
See more information ...
Smart Summary

Structured Summary of the Appellate Tribunal Opinion (16 August 2019)

Factual and Procedural Background

This matter arises from an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by RBL Bank Limited (the Financial Creditor), by which the Corporate Insolvency Resolution Process (CIRP) was initiated against MBL Infrastructures Limited (the Corporate Debtor).

The Adjudicating Authority (National Company Law Tribunal, Kolkata Bench) by an order dated 18 April 2018 disposed of three applications under sub-section (5) of Section 60 of the I&B Code, approved a resolution plan submitted by the 3rd Respondent (Mr. Anjanee Kumar Lakhotia) and allowed exclusion of 106 days for counting the 270 day resolution period. The Adjudicating Authority noted that the Committee of Creditors (CoC) approved the resolution plan with a voting share of 78.50% and that the plan met the requirements of sub-section (2) of Section 30 of the I&B Code.

Appellants — IDBI Bank Limited, Bank of Baroda, Bank of India and State Bank of India — were dissenting financial creditors who challenged the approval of the plan. They filed appeals (Company Appeal (AT) (Insolvency) Nos. 194, 225 & 235 of 2018 and No. 268 of 2019) raising objections described below. The Appellate Tribunal considered those appeals and delivered the impugned judgment dated 16 August 2019.

Legal Issues Presented

  1. Whether the resolution applicant, Mr. Anjanee Kumar Lakhotia, is ineligible under Section 29A(h) of the I&B Code (allegedly being a personal guarantor whose guarantee was invoked by one or more financial creditors).
  2. Whether the resolution plan approved by the Committee of Creditors was viable and feasible as required by Section 30(4) of the I&B Code.
  3. Whether the resolution plan was approved by the Committee of Creditors with the requisite majority and whether the approval process (including exclusion of 106 days and subsequent votes/consents) was valid and open to challenge.

Arguments of the Parties

Appellants' Arguments

  • The resolution applicant, Mr. Anjanee Kumar Lakhotia, is the promoter and Chairman & Managing Director of MBL Infrastructure Ltd. and is ineligible under Section 29A(h) because he is a personal guarantor whose guarantees had been invoked by several banks (RBL Bank, State Bank of India, IDBI Bank — with invocation dates and amounts set out in the record).
  • The resolution plan is not viable or feasible: the claimed liquidation value was Rs. 269.90 crores excluding realizable assets of Rs. 1708.03 crores; the resolution applicant proposed to infuse Rs. 128.30 crores against total payments of Rs. 1,890 crores; repayment to financial creditors was proposed as 25.70% in cash (Rs. 390.62 crores) paid over 8.5 years and 74.30% (Rs. 1,188.34 crores) in NCDs redeemable after 8 years.
  • The total upfront payment to financial creditors was limited (Rs. 59.86 crores excluding NCDs), while operational creditors and statutory dues had long implementation timelines (up to 8.5 years), rendering the plan commercially and legally non-viable.
  • The Committee of Creditors originally approved a plan with 68.50% voting share on 21 December 2017, which appellants said was insufficient; subsequent voting and exclusion of days (to extend the CIRP period for counting) were challenged as irregular, and appellants argued the amended I&B Code provisions were not applicable to the original approval.

Resolution Applicant's (Respondent's) Arguments

  • The resolution applicant denied ineligibility under Section 29A(h). He emphasized that MBL Infrastructure Ltd. is a listed company with a wide base of shareholders, suppliers and employees, and that audits and statutory processes did not reveal irregularities.
  • He described corporate and financial history: tax payments, dividend distribution tax payments, payment of interest/finance charges and employee wages, and explained liquidity constraints due to project cancellations, delays in receivables and non-release of sanctioned banking limits. These reasons were recorded in the Techno Economic Viability (TEV) Study and the resolution plan.
  • Between 30 March 2017 and 18 April 2018, during CIRP, financial creditors controlled the company through the Resolution Professional, and audits (stock/receivables, concurrent, forensic and statutory) conducted by auditors empanelled with SBI or appointed by the CoC did not find malfeasance by promoters or management.
  • The improved resolution plan dated 22 November 2017 was approved by 78.50% of the CoC after consideration of the TEV Study dated 2 December 2017; PNB Investment Services Limited was appointed by the CoC as financial advisor and conducted the TEV study.
  • The resolution plan was submitted prior to 23 November 2017 (before the amendment introducing Section 29A in its present form). The Adjudicating Authority on 18 December 2017 had held the resolution applicant eligible (not barred by Section 29A(c) & (h)), and earlier appeals by banks on that finding were withdrawn without liberty to raise the same issue again before this Appellate Tribunal.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India & Ors. (2019) 4 SCC 17 The principle that the Committee of Creditors (CoC) has the primary responsibility to assess the viability and feasibility of a resolution plan; courts and tribunals should not substitute their commercial judgment for that of the CoC; once approved by CoC and the adjudicating authority, a plan is binding on stakeholders. The Appellate Tribunal relied on Swiss Ribbons to hold that because the CoC approved the plan by a 78.50% majority after considering the TEV study and viability, the Tribunal could not re-examine commercial wisdom or substitute its judgment absent discrimination or unequal treatment of similarly situated creditors. This supported dismissal of the appeals.

Court's Reasoning and Analysis

The Appellate Tribunal's reasoning proceeds from the factual record and statutory principles cited in the opinion:

  1. The Tribunal noted the procedural history: the CoC approved the resolution plan with a voting share of 78.50% (the opinion also records a figure of 78.15% in the course of describing the sequence of consents) and the Adjudicating Authority had excluded 106 days for the purpose of counting the 270-day CIRP period and approved the plan.
  2. The Tribunal recorded appellants' challenges: ineligibility under Section 29A(h) (personal guarantee invocations by various banks) and asserted non-viability/non-feasibility of the plan on cash flow, liquidation value and payment-timeline grounds.
  3. The Tribunal recounted the resolution applicant's factual/forensic defenses: the company was publicly listed, had undergone multiple audits during the CIRP which found no fraud or irregularity, the TEV Study was prepared and considered by the CoC, and that earlier rulings had held the applicant not barred under Section 29A(c) and (h).
  4. The Tribunal relied on the Supreme Court's observations in Swiss Ribbons emphasizing that (i) the CoC is primarily responsible for assessing viability and feasibility of resolution plans; (ii) financial creditors are best placed to evaluate commercial viability; and (iii) once a plan is approved by the CoC and the adjudicating authority, it is binding on stakeholders.
  5. Applying that principle to the facts, the Tribunal found that the CoC, by a substantial majority (78.50%), had approved the plan after considering the TEV study and viability of the Corporate Debtor. In the absence of any demonstrated discrimination or unequal treatment of similarly situated financial or operational creditors, the Tribunal concluded it could not overturn the CoC's commercial assessment.
  6. On the ineligibility point, the Tribunal observed the earlier Adjudicating Authority decision that the resolution applicant was eligible and noted that two earlier appeals by banks on that question were disposed of as withdrawn without liberty to raise the issue again before the Appellate Tribunal; this history informed the Tribunal's approach to the s29A challenge.

Holding and Implications

APPEALS DISMISSED.

Direct effect and immediate consequences (as set out in the opinion):

  • The Appellate Tribunal found no merit in the appeals and dismissed them. The resolution plan approved by the Adjudicating Authority and the Committee of Creditors therefore stands.
  • The Tribunal applied the Swiss Ribbons principle to decline to substitute its commercial judgment for that of the Committee of Creditors in the absence of discrimination or unequal treatment of similarly situated creditors.
  • The order records that there shall be no costs.

The opinion confines its reasoning to the facts before the Tribunal, the statutory scheme of the I&B Code, and the Supreme Court's guidance in Swiss Ribbons; the Tribunal dismissed the challenges to eligibility and to the viability/feasibility of the plan on those bases.

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    Idbi Bank Ltd. v. Mbl Infrastructures Ltd. And Others

    SUDHANSU JYOTI MUKHOPADHAYA, J. On an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short, the I&B Code) filed by the RBL Bank Limited (Financial Creditor) Corporate Insolvency Resolution Process was initiated against MBL Infrastructures Limited (Corporate Debtor). By impugned order dated 18th April, 2018, the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata while disposed of 3 applications filed under sub-section (5) of Section 60 of the I&B Code, approved the resolution plan submitted by the 3rd Respondent Mr. Anjanee Kumar Lakhotia after allowing exclusion of 106 days for the purpose of counting 270 days of resolution period. The Adjudicating Authority noticed that the Committee of Creditors has approved resolution plan with voting share of 78.50% and the plan meets the requirements of sub-section (2) of Section 30 of the I&B Code.

    2. Appellants - IDBI Bank Limited, Bank of Baroda, Bank of India and State Bank of India are the dissenting financial creditors, who have challenged the approval of the plan on the grounds as discussed below.

    3. According to the Appellants, 3rd Respondent - Mr. Anjanee Kumar Lakhotia is the Promoter and Chairman & Managing Director of MBL Company Appeal (AT) (Insolvency) Nos. 194, 225 & 235 of 2018 & Company Appeal (AT)(Insolvency) No. 268 of 2019 Infrastructure Ltd. (Corporate Debtor) and is ineligible under Section 29A(h) of the I&B Code.

    4. Learned counsel appearing on behalf of the Appellants also raised the question of viability and feasibility of the resolution plan on different counts.

    5. It was submitted that the liquidation value of the Corporate Debtor is Rs.269.90 Crores excluding the amount of Rs.1708.03 Crores realizable from the debtors/cash accruals/sale of investments, which should have been part of the liquidation value. In the revised resolution plan, the 3rd Respondent has proposed to infuse Rs. 128.30 Crores as against the total payment of Rs.1890 Crores under the resolution plan.

    6. It was submitted that the total debt of Financial Creditors is Rs. 1480.17 Crores whereas the percentagewise repayment to the Financial Creditors proposed is as follows:

    i) In form of cash : 25.70% i.e. Rs. 390.62 Crores - to be paid over a period of 8.5 years. ii) In form of Non-convertible Debentures (NCDS) : 74.30% i.e. Rs. 1188.34 Crores redeemable after 8 years.

    7. Total upfront payment proposed in favour of the Financial Creditor is Rs.59.86 Crores excluding non-convertible debentures amounting to Rs. 1188.34 Crores, redeemable after 8 years. On the other hand, a sum of Rs.70.28 Crores proposed for payment (excluding statutory dues), no upfront payment has been shown. It was submitted that the total debt of Operational Creditors is Rs. 157.91 Crores; for workmen/employees : Rs.14.55 Crores and statutory dues : Rs.47.97 Crores but the period of implementation of resolution plan proposed is 8.5 years. Therefore, according to the Appellants the resolution Company Appeal (AT) (Insolvency) Nos. 194, 225 & 235 of 2018 & Company Appeal (AT)(Insolvency) No. 268 of 2019 plan is not viable and feasible in the eye of law nor meets the commercial aspect.

    8. It was also submitted that the Resolution Applicant - Mr. Anjanee Kumar Lakhotia is ineligible in terms of Section 29A(h) of the I&B Code being a personal guarantor to RBL Bank Limited on whose application Corporate Insolvency Resolution Process was initiated and personal guarantee has been invoked by the RBL Bank Limited on 23rd January, 2017 due to defaulted amount of Rs.7,16,46,626/-.

    9. Insofar as State Bank of India is concerned, it is submitted that Mr. Anjanee Kumar Lakhotia is also a personal guarantor, which was invoked by State Bank of India on 2nd March, 2017 for default in payment of Rs. 56,46,71,807/- by the principal borrower.

    10. Insofar as IDBI Bank is concerned, it is submitted that Mr. Anjanee Kumar Lakhotia is a personal guarantor, which was invoked on 27th July, 2018 as the principal borrower failed to pay the debt of Rs. 115,08,15,309/-.

    11. Similarly, Mr. Anjanee Kumar Lakhotia is also a personal guarantor of State Bank of India in another matter, in respect of which personal guarantee has not been invoked. He is also a member of the consortium of Bank of Baroda, which has preferred one of the appeals. However, with regard to the Bank of India no relationship has been shown.

    12. Learned counsel for the Appellant(s) submitted that the resolution plan was not approved by Committee of Creditors with requisite majority. The original plan was put to vote in the meeting of the Committee of Creditors held on 21st December, 2017 and in terms of sub-section (4) of Section 30, it was approved by voting share of 68.50% which was not sufficient for the approval of Company Appeal (AT) (Insolvency) Nos. 194, 225 & 235 of 2018 & Company Appeal (AT)(Insolvency) No. 268 of 2019 the resolution plan as on the date of approval amended provision of the I&B Code was not applicable.

    13. It was further submitted that time limit of Corporate Insolvency Resolution Process completed on 25th December, 2017 and no Committee of Creditors meeting was held pursuant to the decision dated 21st December, 2017. After 25th December, 2017, the resolution applicant Mr. Anajee Kumar Lakhotia filed an application bearing CA(IB) No. 50 of 2018 before the Adjudicating Authority for issuance of notices to the Committee of Creditors, who dissented or abstained from the voting. The Adjudicating Authority on 15th January, 2018 issued notice to the dissenting creditors as also to those who were absent. Subsequently, consent was given by the Indian Overseas Bank and Bank of Maharashtra on 31st January, 2018 and the resolution plan was approved with consent of 78.15% voting share. In this background on the application filed by the resolution applicant, the Adjudicating Authority while excluded 106 days for the purpose of counting 270 days (i.e. the period of litigation and non-progress of the Corporate Insolvency Resolution Process) simultaneously approved the resolution plan.

    14. Resolution Applicant on its appearance has denied that he is ineligible in terms of Section 29A(h) of the I&B Code. It was submitted that MBL Infrastructure Ltd. is listed company on Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) and have 23000 shareholders, more than 1000 suppliers and about 2500 employees were working between the years 1995 to 2016. According to him, MBL Infrastructure Ltd. was consistently growing and there was never any irregularity in the bank accounts. It had paid the Income-tax of Rs. 122.62 Crores, Rs. 5.12 Crores of dividend distribution tax Company Appeal (AT) (Insolvency) Nos. 194, 225 & 235 of 2018 & Company Appeal (AT)(Insolvency) No. 268 of 2019 and further taxes of Rs.89.17 Crores for the financial years 2010 to 2016. MBL Infrastructure Ltd. has serviced interest, finance charges and bank guarantee commission of Rs. 459.58 Crores. MBL Infrastructure Ltd. has paid salary and wages to the tune of Rs. 176.93 Crores during the financial years 2010 to 2016. Despite different adverse trade cycles, it survived. The reasons for the liquidity constrains was non-availability of need based and cancellation of two BOT projects due to non-release of sanctioned limits by Banks, as also delay in realization of receivables, non-issuance of LC/BGs within the sanctioned limits by some of the consortium banks, blockage of money in nearly completed projects, continued debt servicing despite inadequate cash accruals etc. After due discussions in Committee of Creditors these have been recorded in TEV Study and Resolution Plan. During the Corporate Insolvency Resolution Process between 30th March, 2017 to 18th April, 2018, the Financial Creditors were in the control of the company through Resolution Professional and during the said period Stock and Receivables Audit, Concurrent Audit and Forensic Audit was conducted by auditors empanelled with State Bank of India and unanimously approved by the Committee of Creditors. Statutory audit was also conducted and no irregularity was found. The Committee of Creditors or the auditors or external agencies appointed by the Committee of Creditors had not found any malfeasance on the part of the promoter or the management of the company. The Resolution Professional controlled by the Committee of Creditors also certified that no fraud or irregularity in transactions was found during the Corporate Insolvency Resolution Process as well as last 2 years prior to the said period. Company Appeal (AT) (Insolvency) Nos. 194, 225 & 235 of 2018 & Company Appeal (AT)(Insolvency) No. 268 of 2019

    15. It was submitted that improved resolution plan dated 22nd November, 2017 has been approved with 78.50% of voting share of the Committee of Creditors. The source of fund as per Techno Economic Viability (TEV) Study Report dated 2nd December, 2017 were taken into consideration. The PNB Investments Services Limited was unanimously appointed by the Committee of Creditors as its financial advisors which carried out the TEV Study Report on 22nd November, 2017. Having noticed the TEV Study Report about viability and feasibility and including the study report, the Committee of Creditors approved the resolution plan. It was submitted that the resolution plan was submitted by the Resolution Applicant prior to 23rd November, 2017 i.e. before the amendment of the I&B Code and introduction of Section 29A. The eligibility of resolution applicant became an issue which was raised before the Adjudicating Authority and by order dated 18th December, 2017 the Adjudicating Authority held that the resolution applicant was eligible and not barred by Section 29A(c) & (h). The said decision of the Adjudicating Authority declaring the Resolution Applicant not barred under Section 29A(c) and (h) was challenged by the RBL Bank Limited and Punjab National Bank before this Appellate Tribunal which was not entertained and subsequently disposed of as withdrawn on 23rd March, 2018 but without liberty to the banks to raise the same issue in any other appeal.

    16. From the aforesaid fact, we find that the Appellants earlier raised the question of ineligibility of the resolution applicant, which was not accepted by this Appellate Tribunal and the appeals preferred by the two Appellant Banks were dismissed as withdrawn without any liberty to raise such issue again before this Appellate Tribunal. Company Appeal (AT) (Insolvency) Nos. 194, 225 & 235 of 2018 & Company Appeal (AT)(Insolvency) No. 268 of 2019

    17. So far as the feasibility and viability of the resolution plan is concerned, the Honble Supreme Court in Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors. (2019) 4 SCC 17) observed :

    73. Under the Code, the Committee of Creditors is entrusted with the primary responsibility of financial restructuring. They are required to assess the viability of a corporate debtor by taking into account all available information as well as to evaluate all alternative investment opportunities that are available. The Committee of Creditors is required to evaluate the resolution plan on the basis of feasibility and viability. Thus, Section 30(4) states:

    30. Submission of resolution plan.(1)- (3) * * * (4) The Committee of Creditors may approve a resolution plan by a vote of not less than sixty- six per cent of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board: Provided that the Committee of Creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution Company Appeal (AT) (Insolvency) Nos. 194, 225 & 235 of 2018 & Company Appeal (AT)(Insolvency) No. 268 of 2019 applicant is ineligible under Section 29-A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of Section 29-A, the resolution applicant shall be allowed by the Committee of Creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of Section 29-A: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of Section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section: Provided also that the eligibility criteria in Section 29-A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (Ordinance 6 of 2018) shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018.

    74. It is important to bear in mind that once the resolution plan is approved by the Committee of Creditors and thereafter by the adjudicating authority, the aforesaid plan is binding on all stakeholders as follows: Company Appeal (AT) (Insolvency) Nos. 194, 225 & 235 of 2018 & Company Appeal (AT)(Insolvency) No. 268 of 2019

    31. Approval of resolution plan.(1) If the adjudicating authority is satisfied that the resolution plan as approved by the Committee of Creditors under sub-section (4) of Section 30 meets the requirements as referred to in sub-section (2) of Section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan: Provided that the adjudicating authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.

    75. Since the financial creditors are in the business of moneylending, banks and financial institutions are best equipped to assess viability and feasibility of the business of the corporate debtor. Even at the time of granting loans, these banks and financial institutions undertake a detailed market study which includes a techno-economic valuation report, evaluation of business, financial projection, etc. Since this detailed study has already been undertaken before sanctioning a loan, and since financial creditors have trained employees to assess viability and feasibility, they are Company Appeal (AT) (Insolvency) Nos. 194, 225 & 235 of 2018 & Company Appeal (AT)(Insolvency) No. 268 of 2019 in a good position to evaluate the contents of a resolution plan. On the other hand, operational creditors, who provide goods and services, are involved only in recovering amounts that are paid for such goods and services, and are typically unable to assess viability and feasibility of business. The BLRC Report, already quoted above, makes this abundantly clear.

    18. As the Committee of Creditors, by majority voting share of 78.50%, has approved the plan after taking into consideration the techno economic report relating to viability and feasibility of the resolution plan and viability of the Corporate Debtor, this Appellate Tribunal cannot sit in appeal in absence of any discrimination or unequal treatment of similarly situated Financial Creditors or Operational Creditors. We find no merit in these appeals. They are accordingly dismissed. No costs. [Justice S.J. Mukhopadhaya] Chairperson [ Justice Bansi Lal Bhat ] Member (Judicial) New Delhi 16th August, 2019 /ns/

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    Idbi Bank Ltd. v. Mbl Infrastructures Ltd. And Others
    (Aug 16, 2019)