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Vishal Vijay Kalantri v. Shailen Shah (Resolution Professional of Dighi Port Ltd.) & Ors.

National Company Law Appellate Tribunal
Jul 24, 2020
Judgment
Subsequent
References
CaseIQ
Case Information
CITATION CODES
citation codes
CASE NO.

466/2020

JUDGES

Bansi Lal Bhat Acting

Jarat Kumar Jain

ACTS

Section 31 (4) read with Section 30 (2) (e) of the I&B Code as well as Sections 5 and 6 of the Competition Act, 2002

SECTION 12 INSOLVENCY AND BANKRUPTCY CODE 2016

Section 30(2)(e), as the provisions of the Code

sub-section (4) of Section 31 of the I&B Code

provisions of Section 30 of the I&B Code.

SECTION 5 COMPETITION ACT 2002

sub-sections (2) & (4) of Section 30

Section 30(2) (e) of the I&B Code

Section 31(1) of the I&B Code.

Section 31(4) of the I&B Code

Section 60 (5) of the I&B Code

Section 30 of the I&B Code,

Section 31 of the I&B Code

Section 12 of the I&B Code,

COMPETITION ACT 2002

Section 30(2) (e)

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Smart Summary (Beta)

Factual and Procedural Background

The instant appeal was preferred by Mr. Vishal Vijay Kalantri (a former director and shareholder of Dighi Port Limited, the Corporate Debtor) against the Adjudicating Authority's order dated 5 March 2020 approving the Resolution Plan submitted by Adani Ports Special Economic Zone Limited (APSEZ). CIRP for the Corporate Debtor commenced by an admission order dated 25 March 2018 in C.P. (IB) No. 1382/MB/2017. Several Resolution Applicants (including JNPT, APSEZ and Veritas) and a settlement proposal from the promoter group (Balaji Infra Projects Limited — BIPL) were considered by the Committee of Creditors (CoC) in multiple meetings.

Key procedural events recorded in the opinion include:

  • Evaluation and ranking of plans in CoC meetings: APSEZ initially ranked first on evaluation scores, but when plans were voted at different stages JNPT's plan was approved earlier while APSEZ later submitted an improved offer (including an upfront payment of Rs. 650 Crores).
  • The Appellate Tribunal in an earlier matter granted the promoters time to pursue a settlement; promoters (through BIPL) submitted a settlement proposal but failed to deposit the Earnest Money Deposit (EMD) and to clarify the source of funds as required by the CoC.
  • The promoters' settlement proposal was rejected by the CoC with 99.68% votes, and thereafter the APSEZ Resolution Plan was approved by the CoC with 99.68% votes. The Resolution Professional filed an application under Section 31 of the I&B Code for approval of APSEZ's plan, which the Adjudicating Authority approved on 5 March 2020 (with certain modifications).
  • The Appellant also filed MA 3298/2019 under Section 60(5) of the I&B Code objecting to rejection of BIPL’s settlement and to approval of APSEZ’s plan; he contended non-compliance with statutory requirements (including alleged need for prior Competition Commission of India approval).
  • The present appeal challenges the Adjudicating Authority's approval of APSEZ's plan and alleges failure to consider objections and improper rejection of the promoters' settlement proposal.
  • The Appellate Tribunal dismissed the appeal on 24 July 2020; the order records reasons including that the CoC vote and statutory compliance were properly considered and that the Appellant failed to demonstrate legal non‑compliance sufficient to upset approval of the plan.

Legal Issues Presented

  1. Whether the Adjudicating Authority erred in approving the Resolution Plan of APSEZ without adequately considering objections raised by the Appellant (including objections to the rejection of the promoters' settlement proposal).
  2. Whether a Resolution Plan that includes a provision for a "combination" (as in Section 5 of the Competition Act, 2002) must obtain prior approval of the Competition Commission of India before the Committee of Creditors approves the plan (i.e., whether the proviso to Section 31(4) of the I&B Code is mandatory).
  3. Whether the commercial wisdom and decision of the Committee of Creditors in selecting and approving a Resolution Plan is amenable to judicial review beyond the limited scope prescribed under the I&B Code (notably Section 30 and Section 31).
  4. Whether the CoC’s rejection of the promoters’ settlement proposal and/or procedural steps (such as non-deposit of EMD) amounted to arbitrary conduct vitiating the CIRP and necessitating sending the Corporate Debtor into liquidation.

Arguments of the Parties

Appellant's Arguments

  • The Adjudicating Authority failed to consider objections raised by the Appellant to APSEZ’s Resolution Plan and to the rejection of BIPL’s settlement proposal.
  • MA 3298/2019 (filed under Section 60(5) of the I&B Code) remained pending before the Adjudicating Authority; action with respect to the approved Resolution Plan was therefore asserted to be illegal.
  • The Resolution Plan required prior approval of the Competition Commission of India (CCI) under the proviso to Section 31(4) because APSEZ purportedly enjoyed dominance in the relevant port segment and the plan contained a provision for combination; absence of such approval makes the plan contrary to Section 30(2)(e) and provisions of the Competition Act, 2002.
  • The promoters’ (BIPL’s) settlement proposal was said to be better for maximisation of value and had been submitted in compliance with the Appellate Tribunal’s earlier order; it was alleged that BIPL was not a willful defaulter.
  • The impugned order is unsustainable and should be set aside, and in the alternative the Corporate Debtor should be sent to liquidation because the approved plan is bad in law.

Committee of Creditors' Arguments

  • Three Resolution Applicants (JNPT, APSEZ, Veritas) submitted plans; JNPT’s plan was earlier approved by the CoC but could not accept modifications directed by the Adjudicating Authority; CoC later considered revised/improved offers.
  • The promoters' settlement proposal was rejected for valid commercial reasons — failure to deposit EMD, non-disclosure of source of funds, and other viability/feasibility concerns. The promoters failed to comply with CoC's requirements and their plan was rejected by 99.68% of CoC votes.
  • CoC followed directions of the Appellate Tribunal in giving opportunities; reasons for approval/rejection are recorded in CoC minutes (e.g., minutes dated 13 September 2019 and 22nd meeting minutes) and reflect commercial wisdom; judicial review cannot reassess CoC’s commercial decision.
  • The Adjudicating Authority’s role under Section 31 is limited to verifying legal/compliance requirements (Section 30 criteria) and not re-evaluating the CoC’s commercial judgment; the approved plan serves to satisfy significant creditor dues and to revive the Corporate Debtor.

Respondent No.4 (APSEZ)'s Arguments

  • The promoters have repeatedly attempted to frustrate CIRP; this appeal is the third such attempt after prior appeals were repelled.
  • Promoters failed to deposit EMD and were declared willful defaulters and lacked capacity to raise required funds; their settlement proposal was rejected on that basis.
  • APSEZ's Resolution Plan complied with legal and financial requirements, provided value maximisation and an upfront payment of Rs. 650 Crores, and was approved by the CoC with an overwhelming majority (99.68%).
  • Commercial wisdom of the CoC is not open to judicial reassessment; procedural lapses or timeline issues are directory and not fatal; promoters had opportunity to raise objections but delayed.
  • The appeal is a tactical attempt to stall implementation of the approved Resolution Plan.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta & Ors (2019) SCC OnLine SC 1478 The commercial decision of the Committee of Creditors is not justiciable; judicial review by the Adjudicating Authority is limited to ensuring that the resolution plan conforms with Section 30(2) (including consideration of maximising value and balancing interests of stakeholders). The court applied this precedent to hold that it could not reassess the CoC's commercial wisdom and its approval of APSEZ’s plan; review is limited to law compliance under Section 30 and Section 31.
Arcelormittal India Pvt. Ltd. v. Abhijit Guhathakurta (Company Appeal (AT) (Insolvency) No. 524 of 2019) Proviso to sub-section (4) of Section 31 (requiring prior CCI approval where a plan contains a provision for combination) is directory and not mandatory; Committee of Creditors may approve a plan subject to later CCI approval and the plan can be approved by the Adjudicating Authority subject to such condition. The court relied on this Appellate Tribunal decision to treat the proviso as directory; applied it to the facts to reject the Appellant’s contention that absence of prior CCI approval rendered APSEZ’s plan void.

Court's Reasoning and Analysis

The court's analysis proceeded in logical stages, grounded on the record and statutory scheme:

  1. Record verification and procedural findings:
    • The court examined the record (order dated 15 January 2020 and related annexures) and found no support for the Appellant’s assertion that MA 3298/2019 had been reserved for judgment along with MA 3270/2019; the alleged fact was unsupported and the Appellant was estopped from raising it.
    • The factual matrix regarding CoC voting (rejection of promoter settlement on 17 September 2019 and approval of APSEZ plan on 19 September 2019 by 99.68% votes) was admitted and not disputed by the Appellant.
  2. Scope of judicial review and commercial wisdom of the CoC:
    • Citing the Essar Steel judgment, the court emphasized that the CoC’s business decision is not amenable to merits-based judicial review; the Adjudicating Authority’s review is limited to assessing whether the resolution plan conforms to Section 30(2) and other legal requirements.
    • The court noted that the Appellant's challenge largely asked the court to prefer the promoter’s settlement on commercial grounds; that challenge could not succeed because it amounted to re-assessing CoC’s commercial judgment.
  3. Assessment of statutory compliance and specific objections:
    • The court found no material before it demonstrating that the approved APSEZ plan contravened any provision of law or the statutory requirements in Section 30 of the I&B Code.
    • The Appellant’s contention that the plan breached Section 30(2)(e) and proviso to Section 31(4) for lack of prior CCI approval was considered. The court analyzed Section 31(4): ordinarily required approvals under other laws must be obtained within one year of Adjudicating Authority approval, but the proviso creates an exception requiring prior CCI approval where a plan contains a provision for combination.
    • The court observed that treating the proviso as mandatory would have serious consequences and referred to the Appellate Tribunal’s earlier decision in Arcelormittal holding the proviso to be directory. That reasoning was applied: the proviso is directory and the CoC may approve a plan subject to CCI approval being obtained subsequently (or such approval may be obtained before Adjudicating Authority approval but after CoC approval, as appropriate). In the present case the combination was stated to be below threshold limits or otherwise not requiring prior CCI approval.
  4. Final evaluative conclusion:
    • Since the Appellant failed to demonstrate that the Adjudicating Authority ignored statutory mandates in Section 31(1) (i.e., that the plan met the tests of Section 30 subsections (2) and (4)), and because the promoters’ settlement had been rejected for valid CoC-documented reasons (e.g., failure to deposit EMD, non-disclosure of source of funds), there was no justifiable reason to interfere with the approval of APSEZ’s plan.
    • The court also noted the practical harm of repeated delay tactics by promoters, emphasizing that such delays increase liabilities and deplete assets of the Corporate Debtor and thereby prejudice stakeholders.

Holding and Implications

Holding: The appeal is dismissed. The objections to the approval of APSEZ's Resolution Plan and to procedural steps taken during the CIRP are repelled.

Implications and Consequences:

  • The Adjudicating Authority's order dated 5 March 2020 approving the APSEZ Resolution Plan (as approved by the Committee of Creditors) stands;
  • The Appellant's contentions that the plan contravened Section 30(2)(e) and that prior CCI approval was mandatorily required before CoC approval were rejected — the court treated the proviso to Section 31(4) as directory (following the Appellate Tribunal's prior view in Arcelormittal) and found no present contravention of law by the approved plan;
  • The court reaffirmed the limited scope of judicial review over CoC commercial decisions (following Essar Steel), and held that the record did not disclose any legal non‑compliance warranting interference; therefore the corporate debtor is not ordered into liquidation on the basis of the objections raised in this appeal;
  • No order as to costs was made by the court (the opinion records "No order as to costs").

Note: The opinion applies established precedents (as cited in the Table of Precedents) and does not purport to create a new principle of law beyond the application of those precedents to the facts of this case.

Show all summary ...

BANSI LAL BHAT, J. Mr. Vishal Vijay Kalantri, a former Director and shareholder of Dighi Port Limited (Respondent No.2/ Corporate Debtor) has preferred the instant appeal impugning order dated 5th March, 2020 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Mumbai in MA 3270/2019 in C.P. (IB) 1382/MB/2017 whereby Company Appeal (AT) (Insolvency) No. 466 of 2020 the Adjudicating Authority has allowed application filed by the Resolution Professional for approval of the Resolution Plan submitted by Adani Ports Special Economic Zone Limited (APSEZ for short) (Respondent No.4). The impugned order is assailed on the ground that the Adjudicating Authority has failed to consider objections raised by the Appellant to the Resolution Plan submitted by APSEZ as also the objections raised by the Appellant qua the rejection of settlement proposal submitted by Balaji Infra Projects Limited (BIPL for short).

2. For appreciating the controversy raised in this appeal, it would be appropriate to make a brief reference to the material facts bearing upon the approval of the Resolution Plan of APSEZ by the Adjudicating Authority.

3. The Corporate Insolvency Resolution Process of the Corporate Debtor was initiated in terms of admission order dated 25th March, 2018 passed by the Adjudicating Authority in C.P. (IB) No. 1382/MB/2017. The admission order came to be challenged before this Appellate Tribunal in Appeal being Company Appeal (AT) (Insolvency) No. 139 of 2018 preferred by the present Appellant. During the pendency of the aforesaid appeal, some development in regard to settlement of claims of creditors appears to have taken place which was taken note of and the Creditors of the Corporate Debtor were asked to consider the settlement proposal emanating from the Appellant. This factual position emerges from the minutes of proceedings recorded on Company Appeal (AT) (Insolvency) No. 466 of 2020 24th July, 2019. It appears that BIPL- holding company of the promoters submitted an offer to the Committee of Creditors. Meanwhile, Section 12 of the Insolvency and Bankruptcy Code, 2016 (I&B Code for short) suffered an amendment. The Corporate Insolvency Resolution Process continued though the Appellant and other promoters of the Corporate Debtor were granted time to settle the claims of the Financial Creditors. Committee of Creditors was given liberty to consider all Resolution Plans pending before it and approve one or other resolution plan within the given time frame. Committee of Creditors was directed to have regard for the fact that the Resolution Plan considered for approval was better than the settlement proposal submitted by the promoters of the Corporate Debtor. Three proposed Resolution Plans including the Resolution Plan of the Respondent No.4 besides the settlement proposal of promoter were taken up for consideration. However, the promoter failed to deposit earnest money (EMD) as sought by the Committee of Creditors in its 19th Meeting. Certain clarifications were sought from the Resolution Applicants. Committee of Creditors fixed the deadline of 12th September, 2019 for promoters of Corporate Debtor to submit EMD of 20% of the settlement proposal along with further details/ clarifications etc. Respondent No.4 complied with the requirements and submitted the clarifications required of it. However, the promoter did not comply. It appears that in pursuance of direction of this Appellate Tribunal, the Committee of Creditors proposed to put a resolution under Section 12A of the I&B Company Appeal (AT) (Insolvency) No. 466 of 2020 Code along with the settlement proposal for voting. Committee of Creditors decided that in the event of settlement proposal not mustering support of requisite percentage of votes, Resolution Plan of Respondent No.4 be put to vote. Settlement proposal was rejected by the Committee of Creditors with 99.68% votes. Thereafter, Resolution Plan of the Respondent No.4 was put to vote and same was approved by the Committee of Creditors with 99.68% votes. Thereafter, the Resolution Plan of the Respondent No.4 approved by the Committee of Creditors with requisite majority was placed by the Resolution Professional before the Adjudicating Authority by filing an application under Section 31 of the I&B Code and the same was approved by the Adjudicating Authority in terms of the impugned order with certain modifications and the same has been assailed through the medium of instant appeal.

4. Learned counsel for the Appellant submits that in terms of the order dated 11th October, 2019, the Adjudicating Authority had reserved orders in both MA No. 3270 & MA No. 3298 of 2019. Thereafter, the constitution of the Bench changed due to elevation of the Judicial Member and both MAs were reheard on 15th January, 2020 but in the order sheet reserving of the order in regard to MA No. 3298 of 2019 was omitted.

5. We have scanned through the record to find out the factual position. It appears from copy of order dated 15th January, 2020 Company Appeal (AT) (Insolvency) No. 466 of 2020 forming Annexure A-31 (Page 381 Vol.II of the appeal paper book) that the re-constituted Bench, after re-hearing the matter, reserved orders on MA 3270 of 2019 and MA 1560 of 2019. There is nothing on the record to substantiate Appellants contention that MA 3298 was heard along with MA 3270 and order was reserved qua the same. The alleged fact is, therefore, not supported by record and Appellant is estopped from raising any issue on this score.

6. The factum of the BIPL/ Promoters settlement proposal having been rejected by the Committee of Creditors and the Committee of Creditors having voted in favour of the Resolution Plan submitted by APSEZ with overwhelming majority is not disputed by the Appellant. Admittedly, the Promoters Settlement Proposal was rejected on 17th September, 2019 while the Resolution Plan submitted by APSEZ was approved by the Committee of Creditors with overwhelming majority of above 99.68% votes on 19th September, 2019. It is thereafter that the Appellant claims to have filed application being MA 3298 of 2019 under Section 60 (5) of the I&B Code alleging arbitrary rejection of BIPLs proposal and objecting to Resolution Plan of APSEZ. This appears to have been done when the application of Resolution Professional under Section 31 of the I&B Code was pending consideration before the Adjudicating Authority for approval of the Resolution Plan of APSEZ. As regards the objections raised qua the approved Resolution Plan of APSEZ, it is submitted on behalf of the Appellant that the Resolution Company Appeal (AT) (Insolvency) No. 466 of 2020 Plan required permission from the Competition Commission of India prior to approval of the Resolution Plan by the Committee of Creditors but no such permission was submitted with the Resolution Plan by APSEZ. It is submitted that the Resolution Plan can be approved under Section 31 only if such plan fulfils the mandate of Section 30(2) (e) of the I&B Code implying that the Resolution Plan does not contravene any provisions of law. It is submitted that in the instant case the approved Resolution Plan breaches the mandate of proviso to Section

31 (4) read with Section 30 (2) (e) of the I&B Code as well as Sections 5 and 6 of the Competition Act, 2002 and for this reason alone, the approved Resolution Plan being bad in law is liable to be set aside and the Corporate Debtor has to be sent into liquidation. Learned Counsel for the Appellant further submits that APSEZ enjoyed dominance in the Indian Port Segments and this fact is acknowledged in the impugned order but the Adjudicating Authority has failed to consider whether or not Competition Commission of Indias approval has been obtained as required in proviso to Section 31 (4) of the I&B Code. It is further submitted that MA No. 3298 filed by the Appellant is still pending before the Adjudicating Authority and any action with respect to the approved Resolution Plan is illegal and non-est. It is submitted on behalf of Appellant that BIPL has not been declared as a wilful defaulter by any Bank and the Settlement Proposal has been submitted in terms of order dated 24th July, 2019 passed by this Appellate Tribunal. Company Appeal (AT) (Insolvency) No. 466 of 2020 Learned counsel for the Appellant submits that the impugned order, being unsustainable, is liable to be set aside.

7. Per contra, it is submitted on behalf of the Committee of Creditors that three Resolution Applicants namely (i) Jawaharlal Nehru Port Trust (JNPT for short), (ii) APSEZ, (iii) Veritas India Limited (Veritas for short) submitted their Resolution Plans before the Committee of Creditors. Resolution Plan of JNPT was approved by the Committee of Creditors. However, the Adjudicating Authority proposed additional conditions to be complied with by JNPT, which it was unable to accept. In terms of directions given by the Adjudicating Authority, the Committee of Creditors was required to provide another chance to the three applicants to submit revised resolution plans. Meanwhile, a number of Financial Creditors, who were part of the Committee of Creditors, filed claims of more than Rs.3000 Crores. The Committee of Creditors considered the promoters offer on the basis of viability, feasibility and financial matrix in a series of meetings (17th to 22nd Committee of Creditors meetings). The plan was not found to be acceptable for various reasons including the promoters having failed to deposit the EMD and non-disclosure of the source of funds of the promoters partner SPGP Holdings (HK Limited). The Appellants plan, when put to vote, was rejected by 99.68% of the Committee of Creditors whereas the plan submitted by APSEZ was approved by the Committee of Creditors by majority of 99.68%. It is further submitted Company Appeal (AT) (Insolvency) No. 466 of 2020 that the matter pending in appeal before this Appellate Tribunal was disposed of vide judgment dated 12th March, 2020 taking note of the Judgment of the Honble Apex Court in Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta & Ors. (2019) SCC OnLine SC 1478 and it was held that the Adjudicating Authority or this Appellate Tribunal cannot sit in appeal on the commercial decision of the Committee of Creditors. The matter was remitted to the Adjudicating Authority without interfering with its order dated 25th March, 2018. The Adjudicating Authority, in terms of its order dated 5th March, 2020 approved the Resolution Plan of APSEZ which had been approved by the Committee of Creditors. It is submitted that the commercial wisdom of Committee of Creditors cannot be reassessed within the limited scope of consideration available to the Adjudicating Authority under Section 31(1) of the I&B Code. The Adjudicating Authority while examining whether the plan conforms with the requirements of Section 30 of the I&B Code, is not required to examine commercial wisdom of the Committee of Creditors in approving a particular plan. It is submitted that the Appellant has failed to demonstrate that the approved Resolution Plan was not law compliant, Appellants focus having been on showing that its plan was superior to that of APSEZ. However, the plan of Appellant has been rejected by the same voting percentage of Committee of Creditors i.e. 99.68% which has approved the Resolution Plan of APSEZ and reasons for rejection of Appellants plan and approval of plan of Respondent No.4 are reflected Company Appeal (AT) (Insolvency) No. 466 of 2020 in the minutes dated 13th September, 2019 of 22nd Committee of Creditors meeting. It is further submitted that the objections taken by the Appellant in MA 3298/2019 are a mere reiteration of the objections already raised by him before this Appellate Tribunal in Appeal No. 139 of 2018 which have been considered in its Judgment dated 12th March, 2020. The Appellants plan has been deliberated in various Committee of Creditors meeting whereafter it has been rejected under Section 12A by an overwhelming majority. This Appellate Tribunal declined to interfere with the commercial wisdom of Committee of Creditors as reflected in Judgment dated 12th March, 2020. Lastly, it is submitted that the admitted dues of the Financial Creditors being over Rs.3000 Crores, approval of the Resolution Plan of the Respondent No.4 by the Adjudicating Authority would not only satisfy portion of claim of the Creditors but also revive the Corporate Debtor.

8. It is submitted on behalf of the Respondent No.4- APSEZ that the challenge thrown by the promoter to order of admission and approval of an earlier Resolution Plan in CA Nos.139/2018 and 722/2019 had been repelled by this Appellate Tribunal in terms of Judgement dated 12th March, 2020 and this is the third attempt by the promoter to frustrate the insolvency resolution proceedings. It is submitted that the promoters offer of settlement to the lenders under Section 12A of the I&B Code stands rejected by 99.68% votes for a variety of reasons including failure to deposit the EMD and disclose the source of funds. Company Appeal (AT) (Insolvency) No. 466 of 2020 Further, the promoters were declared wilful defaulters who did not have even the capacity to raise funds for depositing EMD. It is further submitted that the promoters by their actions have caused a complete downfall to the Corporate Debtor which is a port of National importance. It is submitted that the Resolution Plan submitted by APSEZ conformed to all legal and financial parameters and provided for value maximisation and an upfront payment of Rs.650 Crores which was approved by Committee of Creditors with an overwhelming majority of 99.68%. It is submitted that the commercial wisdom of the Committee of Creditors in approving APSEZ plan, which has been approved by the Adjudicating Authority, is not open to judicial review. It is further submitted that mere non-adherence to the time line/procedure would not impact the approval of the Resolution Plan as the rules of procedure are only directory. It is submitted that the promoters had attended the Committee of Creditors meeting when Resolution Plan of APSEZ was considered and they had been provided copies of the Resolution Plan. No objection was raised by the Appellant for more than 50 days with regard to its application. It is submitted that the appeal has been preferred only to stall the implementation of the approved Resolution Plan for ulterior motives and the objections raised on technical ground would not sustain.

9. Heard learned counsel for the parties and scanned through the record meticulously. At the very outset, we may observe that the instant Company Appeal (AT) (Insolvency) No. 466 of 2020 case is yet another instance of the promoters not letting the goose escape from their dragnet, though it no more lays golden eggs. All possible endeavours are made by the promoters to frustrate the Corporate Insolvency Resolution Process and thwart all attempts at resolution of the Corporate Insolvency and revival of the Corporate Debtor thereby jeopardising the legitimate interests of all stakeholders and defeating the object of legislation. This is besides the fact that each days delay entails the consequences of increasing the liabilities and depleting the resources/ diminishing the value of assets of the Corporate Debtor. We say so as in the instant case this is the third attempt to stall the process, the earlier two efforts on the part of promoters having fizzled out.

10. Fathoming through the depths of the recorded versions of events, we find that in the Corporate Insolvency Resolution Process against Dighi Port Limited at the instance of DBM Geotechnics and Constructions Limited- an Operational Creditor of the Corporate Debtor. JNPT, APSEZ and Veritas Consortium submitted their Resolution Plans. It happened in the 7th meeting of the Committee of Creditors held on 22nd November, 2018. On evaluation, the Resolution Plan submitted by APSEZ got the first ranking with 60.46%. The Resolution Plan submitted by APSEZ being declared as the Highest Evaluated Compliant Resolution Plan was put to vote on 31st January, 2019. However, the same was rejected by 99.38% of votes by the Company Appeal (AT) (Insolvency) No. 466 of 2020 Committee of Creditors. Resolution Plan submitted by the JNPT ranking second with 56.88 score, when put to vote, was approved by 99.38% members of the Committee of Creditors. The Resolution Professional filed application under Section 31 of the I&B Code seeking approval of the Resolution Plan of JNPT already approved by the Committee of Creditors. Meanwhile, APSEZ submitted a revised offer of upfront cash of Rs. 650 Crores on 15th February, 2019. However, by then the Resolution Plan of JNPT had been approved by the Committee of Creditors and application under Section 31 of the I&B Code was pending consideration before the Adjudicating Authority. Resolution Plan of JNPT came to be approved by the Adjudicating Authority with certain modification as emerges from order of the Adjudicating Authority dated 8th May, 2019. However, JNPT expressed its inability to accept the modifications in terms of the order dated 8th May, 2019 passed by the Adjudicating Authority. It further come to fore from record that in its 16th Meeting held on 8th July, 2019, the Committee of Creditors resolved to provide one more opportunity to all the three Resolution Applicants. Around the same time, the promoter of the Corporate Debtor assailed the triggering of Corporate Insolvency Resolution Process before this Appellate Tribunal. This Appellate Tribunal in terms of the order dated 24th July, 2019, provided three weeks time to the promoters to arrive at a settlement with the creditors of the Corporate Debtor. The promoters presented the contours of the offer submitted by BIPL, the promoters holding company, to the Company Appeal (AT) (Insolvency) No. 466 of 2020 Committee of Creditors. It happened in the 17th Meeting of the Committee of Creditors held on 13th August, 2019. This Appellate Tribunal, having regard to the amendment effected in Section 12 of the I&B Code, declined to provide more time to the parties and directed the process of resolution to continue for another approximately 90 days including the period of determination by the Adjudicating Authority. Appellant/ Promoter was granted two weeks time to settle the matter. It was left to the Committee of Creditors to consider all the plans for approval taking into consideration the viability, feasibility and financial matrix of all resolution plans. The Committee of Creditors, pursuant to the order of this Appellate Tribunal, directed the promoters to submit their final settlement offer along with Earnest Money Deposit. The Resolution Applicants too were directed to submit their respective improved Resolution Plans or revalidate their previous Resolution Plans. Subsequently, JNPT withdrew from the fray and APSEZ offered Rs.650 Crores upfront payment in addition to payment of CIRP cost and dues payable to the Maharashtra Maritime Board in priority to other dues whereas Veritas Consortium offered Rs.50 Crores as upfront payment and Rs. 475 Crores as deferred payment starting from 2024 with 10% equity besides payment of CIRP costs and dues of Maharashtra Maritime Board. The promoter offered Rs. 680 Crores to the Financial Creditors besides Rs. 50 Crores towards the CIRP costs and payment to Operational Creditors. The plan of the promoter was in the nature of a settlement offer. Admittedly, the promoter failed to submit an Earnest Company Appeal (AT) (Insolvency) No. 466 of 2020 Money Deposit as required by the Committee of Creditors at its 19th meeting. This was in addition to failure on the part of promoter to provide clarity as regards the source of funds. Committee of Creditors, in its 22nd meeting held on 13th September, 2019 decided to put the settlement offer to vote. The Resolution for withdrawal under Section 12A was not approved as 99.68% of the Committee of Creditors voted against the said resolution. Thereafter the Resolution Plan of APSEZ was put to vote and the same was approved by 99.68% of the Committee of Creditors.

11. It is not disputed that the fair value and liquidation value was determined by the duly appointed registered valuers and the approved resolution plan was considered with regard to its viability and feasibility in terms of the provisions of the I&B Code and CIRP Regulations. Nothing has been brought to our notice to demonstrate that the approved resolution plan of APSEZ contravenes any provisions of law. The only issue raised is that the settlement offer emanating from the promoter is better as regards maximisation of the value of the assets of the Corporate Debtor and subserves the interest of all stakeholders. This argument, in the nature of such settlement offer being superior to the approved Resolution Plan of APSEZ in the context of financial matrix, viability and feasibility, cannot be accepted for the simple reason that the decision regarding feasibility and viability of a Resolution Plan qua the intended objective of I&B Code is essentially a Company Appeal (AT) (Insolvency) No. 466 of 2020 business decision resting upon commercial wisdom of the Committee of Creditors and is not amenable to judicial review/ justiciable in law. It is the settled position of law that the business decision of the majority of the Committee of Creditors is not justiciable and judicial review is limited to the Resolution Plan being in conformity with law and complying with the provisions of Section 30 of the I&B Code. This proposition of law has been laid down in Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta & Ors. (2019) SCC OnLine SC 1478 wherein the Honble Apex Court held:

54. This is the reason why Regulation 38(1A) speaks of a resolution plan including a statement as to how it has dealt with the interests of all stakeholders, including operational creditors of the corporate debtor. Regulation 38(1) also states that the amount due to operational creditors under a resolution plan shall be given priority in payment over financial creditors. If nothing is to be paid to operational creditors, the minimum, being liquidation value - which in most cases would amount to nil after secured creditors have been paid - would certainly not balance the interest of all stakeholders or maximise the value of assets of a corporate debtor if it becomes impossible to continue running its Company Appeal (AT) (Insolvency) No. 466 of 2020 business as a going concern. Thus, it is clear that when the Committee of Creditors exercises its commercial wisdom to arrive at a business decision to revive the corporate debtor, it must necessarily take into account these key features of the Code before it arrives at a commercial decision to pay off the dues of financial and operational creditors. There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or subclass of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include judicial review that is mentioned in Section 30(2)(e), as the provisions of the Code are also provisions of law for the time being in force. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Company Appeal (AT) (Insolvency) No. 466 of 2020 Committee of Creditors, the limited judicial review available is to see that the Committee of Creditors has taken into account the fact that the corporate debtor needs to keep going as a going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that the interests of all stakeholders including operational creditors has been taken care of. If the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been kept in view, it may send a resolution plan back to the Committee of Creditors to re-submit such plan after satisfying the aforesaid parameters. The reasons given by the Committee of Creditors while approving a resolution plan may thus be looked at by the Adjudicating Authority only from this point of view, and once it is satisfied that the Committee of Creditors has paid attention to these key features, it must then pass the resolution plan, other things being equal.

12. It is, therefore, manifestly clear that the judicial review qua the approval of the Resolution Plan is limited and the business decision based on commercial wisdom of Committee of Creditors cannot be assailed in appeal. In absence of Appellant being able to demonstrate Company Appeal (AT) (Insolvency) No. 466 of 2020 that the Adjudicating Authority has failed to consider the statutory mandate embodied in Section 31(1) of the I&B Code as regard the Resolution Plan meeting the requirements of sub-sections (2) & (4) of Section 30 and that the settlement offer emanating from the promoter was rejected arbitrarily in spite of the same conforming to the requirements under the I&B Code and the CIRP Regulations, we do not find any justifiable reason to interfere with the approval of the Resolution Plan of Respondent No.4 by the Adjudicating Authority.

13. In so far as the grievance regarding non-consideration of MA 3298 of 2019 is concerned, on facts, we find that the same had not been reserved for judgment as contended. This is besides the fact that the issue raised therein encompassed the grievance projected in Appeal No.

139 of 2018 which was considered and dealt with in Judgment delivered on 12th March, 2020. Thus viewed, the grievance on this score does not survive for consideration anymore and cannot be held to clothe the Appellant with a right to raise the plea of material irregularity in Corporate Insolvency Resolution Process vitiating the entire exercise culminating in approval of the Resolution Plan of APSEZ.

14. Now adverting to the issue raised by the Appellant in regard to permission under the Competition Act, 2002 from the Competition Commission of India prior to the approval of the Resolution Plan by the Committee of Creditors, be it seen that the approved Resolution Plan has not been found to be violative of the mandate of Section 30(2) (e) of Company Appeal (AT) (Insolvency) No. 466 of 2020 the I&B Code. The finding in regard to the approved Resolution Plan, not being in conflict with any provision of law in force, has been affirmed hereinabove. In so far as the Resolution Plan being compliant with proviso to Section 31(4) of the I&B Code is concerned, there is no doubt that a Resolution Plan containing a provision for combination falling within the ambit of Section 5 of the Competition Act, 2002, prima facie appears to require prior approval of the Competition Commission of India. However, it is contended by Respondents that the statutory requirement by its very nature is directory. To leave no scope for ambiguity, we may elaborate on this aspect by referring to the provision which reads as under:

31. Approval of resolution plan. ..(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as Company Appeal (AT) (Insolvency) No. 466 of 2020 referred to in Section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.

15. A plain reading of the provision makes it abundantly clear that the Resolution Applicant is required to obtain necessary approval required under any extant law within one year from the date of approval of the Resolution Plan by the Adjudicating Authority or within such time as may be provided in such law but not later than one year. However, this requirement of obtaining the necessary approval pursuant to approval of the Resolution Plan by the Adjudicating Authority has been subjected to one exception carved out in the form of proviso to sub-section (4) which enjoins upon the Resolution Applicant to obtain approval in regard to provision for combination, while such provision has been made in the Resolution Plan, prior to approval of such Resolution Plan by the Committee of Creditors. A cursory look at the provision engrafted in sub-section (4) of Section 31 of the I&B Code reveals that while with regard to an ordinary Resolution Plan, the Resolution Applicant is required to obtain necessary approval required under any extant law within one year from the date of such approval by Adjudicating Authority only after such Resolution Plan has been Company Appeal (AT) (Insolvency) No. 466 of 2020 approved by the Adjudicating Authority, however, a Resolution Plan containing the provision for combination is required to obtain approval of the Competition Commission of India prior to the approval of such Resolution Plan by the Committee of Creditors. It is manifestly clear that a Resolution Plan containing provision for combination has been treated as a class apart requiring approval of the Competition Commission of India even prior to such Resolution Plan being approved by the Committee of Creditors. However, treating such requirement as mandatory is fraught with serious consequences. The issue regarding the statutory requirement of a Resolution Plan containing a provision for combination requiring prior approval of the Competition Commission of India even before such Resolution Plan is approved by the Committee of Creditors, being not mandatory and only directory in nature stands addressed by this Appellate Tribunal in Arcelormittal India Pvt. Ltd. v. Abhijit Guhathakurta Company Appeal (AT) (Insolvency) No. 524 of 2019. Para 15 which is relevant for our purposes, is reproduced hereunder:

15. We have noticed and hold that proviso to sub- section (4) of Section 31 of the I&B Code which relates to obtaining the approval from the Competition Commission of India under the Competition Act, 2002 prior to the approval of such Resolution Plan by the Committee of Creditors, is directory and not mandatory. Company Appeal (AT) (Insolvency) No. 466 of 2020 It is always open to the Committee of Creditors, which looks into viability, feasibility and commercial aspect of a Resolution Plan to approve the Resolution Plan subject to such approval by Commission, which may be obtained prior to approval of the plan by the Adjudicating Authority under Section 31 of the I&B Code. In present matter already approval of the Competition Commission of India has been taken to the Resolution Plan.

16. The view taken by this Appellate Tribunal in Arcelormittal India Pvt. Ltd. (Supra) holds the field as the same has not been reversed or set aside in appeal or other proceeding. Obtaining of requisite approval under Competition Act, 2002 with regard to the provision of the Combination in the instant case is stated to be not required as the same is below threshold limit. Objection raised to buttress the argument that in absence of necessary prior statutory approval of the Committee of Creditors qua the combination, Resolution Plan of APSEZ is in contravention of Section 31(4) of the I&B Code, cannot be sustained and the Appellant cannot be heard to say that the approved Resolution Plan of APSEZ being in contravention of law leaves no option but to send the Corporate Debtor into liquidation. Company Appeal (AT) (Insolvency) No. 466 of 2020

17. All objections raised qua the action of the Resolution Professional during Corporate Insolvency Resolution Process, approval of Resolution Plan of APSEZ by the Committee of Creditors and its subsequent approval by the Adjudicating Authority being unfounded are hereby repelled. There is no merit in this appeal and the same is dismissed. No order as to costs. [Justice Bansi Lal Bhat] Acting Chairperson [Justice Jarat Kumar Jain] Member (Judicial) [Shreesha Merla] Member (Technical) NEW DELHI 24th July, 2020

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