NCLT: Duty of Adjudicating Authority to Satisfy Itself that Resolution Plan Approved by CoC Meets Requirements Under Section 30(2) IBC
The Amravati bench of the National Company Law Tribunal (NCLT) by its single member Justice Telaprolu Rajani (Judicial Member) approved the proposal of Sagar Cements to acquire Andhra Cements for Rs 922 crore the Jaypee Group cement manufacturer currently undergoing insolvency proceedings will continue to be listed on the bourses.
The Resolution Professional (in short, the RP) in respect of M/s. Andhra Cements Limited (the Corporate Debtor) sought approval of the Resolution Plan (in short, the Plan) in an Application under Section 30(6) and 31(1) of Insolvency and Bankruptcy Code, 2016 (IBC) Read with Regulation 39(4) of Insolvency and Bankruptcy Board of India (Insolvency Resolution for Corporate Persons) Regulations, 2016.
Earlier, the NCLT vide its order dated 26th April, 2022 had directed initiation of Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor and appointed Ms. Nirav Kirit Pujara as Interim Resolution Professional (IRP).
On perusal of the Resolution Plan, it was observed that the Resolution Plan provided for the following:
a) Payment of CIRP Cost as specified under Section 30(2)(a) of the IBC.
b) Repayment of Debts of Operational Creditors as specified under Section 30(2)(b) of the IBC.
c) For management of the affairs of the Corporate Debtor, after the approval of Resolution Plan, as specified under Section 30(2)(c) of the IBC.
d) The implementation and supervision of Resolution Plan by the RP and the CoC as specified under Section 30(2)(d) of the IBC.
e) The RP has certified through affidavit that the Resolution Plan is not in contravention to any of the provisions of law, for the time being in force, as specified under Section 30(2)(e) of the IBC.
The Tribunal pursued the Resolution Plan and related documents submitted along with the application and found that the Resolution Plan submitted by the Resolution Applicant. It found it to be meeting all the requirements of the IBC, 2016 and more importantly Section 30 (2) of the IBC Code and Regulation 38 (1A) and applicable CIRP Regulations and held that it does not contravene any of the provisions of law and caters to the interest of all the Stakeholders.
The NCLT observed, "Section 30(6) of the IBC enjoins the Resolution Professional to submit the Resolution Plan as approved by the CoC to the Adjudicating Authority. Section 31 of the IBC deals with the approval of the Resolution Plan by the Authority, if it is satisfied that the Resolution Plan as approved by the CoC under section 30(4) meets the requirements provided under section 30(2) of the IBC. Thus, it is the duty of the Adjudicating Authority to satisfy itself that the Resolution Plan, as approved by the CoC, meets the above requirements."
In terms of Regulation 27 of the Regulations, Liquidation value was ascertained through registered valuers as Rs. 708.20 crore while the Resolution Plan offers Rs.767,46,00,000/-.
The Tribunal held that the RP had complied with the requirement of the IBC in terms of Section 30(2)(a) to 30(2)(f) and Regulations 38(1), 38(1-A), 38 (1-B) 38(2) & 38(3) of the Regulations. The Plan also provided for keeping the Company as a going concern and to operate in its normal course of business upon implementation of Resolution Plan. No objection had been filed by anyone in this regard.
Further, the NCLT referred the decision passed in the case of K Sashidhar vs. Indian Overseas Bank and Others (2019) the Hon'ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the IBC, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan, as approved by CoC, meets the requirements specified in Section 30(2). The Court had observed that the role of the NCLT is 'no more and no less.'
Further, the Apex Court had observed that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan "as approved" by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements.
Hence, the NCLT opined that the instant Resolution Plan was found to be meeting the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39 (4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. Hence the same was approved.