Imp. Rulings - Scope of Judicial Review & Commercial Wisdom of CoC.

Imp. Rulings - Scope of Judicial Review & Commercial Wisdom of CoC.

Index; 

1. SCI (2025.04.01) In Piramal Capital and Housing Finance Ltd. Vs 63 Moons Technologies Ltd. and Ors.  [(2025) ibclaw.in 120 SC, 2025 INSC 421, Civil Appeal Nos. 1632-1634 of 2022 with Diary No. 6037 of 2022, and other appeals]

-----------------------------------------------------------

1). SCI (2025.04.01) In Piramal Capital and Housing Finance Ltd. Vs 63 Moons Technologies Ltd. and Ors.  [(2025) ibclaw.in 120 SC, 2025 INSC 421, Civil Appeal Nos. 1632-1634 of 2022 with Diary No. 6037 of 2022, and other appeals] held that;

(V) SCOPE OF JUDICIAL REVIEW: –

# 29. Before adverting to the issues involved in these Appeals, let us examine the scope of judicial review by the NCLT under Section 31 and the scope of judicial review by NCLAT under Section 61 of IBC.

# 30. From the bare perusal of the Statement of Objects and Reasons, it is discernible that one of the prime objects of IBC is to provide for implementation of the Insolvency Resolution Process in a time bound manner for maximization of value of assets in order to balance the interests of the stakeholders. The Legislature in order to fill up critical gaps in the corporate insolvency framework, had made amendments in certain provisions by Act of 26 of 2019, making the RP approved by the Adjudicating Authority binding on the Central Government, any State Government or local authority to whom a debt is owned in respect of payment of dues arising under any law for the time being in force.

# 31. If one glances through the scheme of the IBC, its purpose is also explicitly spelt out from the various provisions of the Act itself. The role and importance of the CoC have been stated in Section 21, the duties of the Resolution Professional in Section 25, the approval of RP by the Adjudicating Authority in Section 31. Certain mandates have been given in Section 31 for the effective implementation of the RP, as approved by the CoC. The said requirements are (i) the RP must be approved by the CoC by a vote of not less than 66% of voting share of the financial creditors, as contemplated in sub-section (4) of Section 30. (ii) the RP submitted by the Resolution Professional must confirm the requirements of sub-section (2) of Section 30. The mandatory contents of the RP have also been stated in Regulation 38 of the Regulations, 2016. Thus, having regard to Section 31, it is clear that the Adjudicating Authority i.e. NCLT, if it is satisfied that the RP as approved by the CoC under sub-section (4) of Section 30 meets the requirements as referred to in sub-section (2) of Section 30, it shall by an order approve the RP, which shall be binding on all the stakeholders. The Adjudicating Authority can reject the RP under sub-section (2) of Section 31, where it is satisfied that the RP does not confirm to the requirements referred to in sub-section (1) thereof.

# 32. At this juncture, it is also necessary to refer to Section 61 which deals with the grounds on which Appeals could be preferred before the Appellate Authority i.e. NCLAT against the order approving the RP under Section 31 by the NCLT. As per sub-section (3) of Section 61, an appeal against an order of approving the RP under Section 31 could be filed on one of the five grounds mentioned therein. One of the grounds on which an Appeal could be filed is, when the approval of RP by the NCLT is in contravention of the provisions of any law for the time being in force. Another ground is, when there has been material irregularity in exercise of the powers by the Resolution Professional during the Corporate Insolvency Resolution period. There are other three grounds with which we are not concerned in the present set of Appeals. Suffice it to say that there are specific grounds mentioned in the sub-section (3) for preferring of an Appeal before the NCLAT under Section 61 of the Code. Thus, the powers to be exercised by the NCLAT under Section 61, have also been specifically confined to the grounds mentioned therein.

# 33. The reasons for circumscribing the powers of NCLT under Section 31 in approving/rejecting the RP approved by the CoC and of the NCLAT under Section 61 in entertaining the Appeals arising out of the orders passed by the NCLT approving the RP on limited grounds are not far to be culled out. The very prominent purpose of the IBC has been spelt out in the long title of the Act itself, which is to promote entrepreneurship, availability of credit and balance the interest of all the stakeholders in the CIRP proceedings in a time bound manner. This Court in catena of decisions has dealt with the dominant purpose and objectives of enacting the IBC, while examining the scope of judicial review by the NCLT and the NCLAT over the commercial wisdom exercised by the CoC.

# 34. In Arcelormittal India Private Limited vs. Satish Kumar Gupta and Others,7 this Court had elaborately adverted to the legislative history and delineated the broad contours of the provisions of the IBC, from which it could be seen that the commercial wisdom of CoC has been given prominent status without any judicial intervention, for ensuring the completion of Resolution Process within the timelines prescribed by the IBC. It is also required to be noted that there is a mandate of completing the Resolution Process within 270 days (outer limit), failing which an initiation of Liquidation process has been made inevitable. This Court in the said judgment after discussing the scheme of the Act, and also the earlier judgments, emphasized on the prescription of time-limit for the completion of Insolvency process. Paragraph 75 of the said judgment being relevant is reproduced hereunder: –

• “75. In fact, even the literal language of Section 12(1) makes it clear that the provision must read as being mandatory. The expression “shall be completed” is used. Further, sub-section (3) makes it clear that the duration of 180 days may be extended further “but not exceeding 90 days”, making it clear that a maximum of 270 days is laid down statutorily. Also, the proviso to Section 12 makes it clear that the extension “shall not be granted more than once.”

# 35. In K. Sashidhar vs. Indian Overseas Bank and Others (supra), this Court dealt with the discretion of the Adjudicating Authority (NCLT) and the jurisdiction of the NCLAT as an Appellate Authority and held as under: –

• 58. Indubitably, the inquiry in such an appeal would be limited to the power exercisable by the resolution professional under Section 30(2) of the I&B Code or, at best, by the adjudicating authority (NCLT) under Section 31(2) read with Section 31(1) of the I&B Code. No other inquiry would be permissible. Further, the jurisdiction bestowed upon the appellate authority (Nclat) is also expressly circumscribed. It can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters “other than” enquiry into the autonomy or commercial wisdom of the dissenting financial creditors. Thus, the prescribed authorities (NCLT/NCLAT) have been endowed with limited jurisdiction as specified in the I&B Code and not to act as a court of equity or exercise plenary powers.”

36. In Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Others (supra), a Three-Judge Bench discussed in detail the issues pertaining to the role of Resolution Professionals, CoCs, and the jurisdiction of NCLT and NCLAT and observed as under: –

• “64. Thus, what is left to the majority decision of the Committee of Creditors is the “feasibility and viability” of a resolution plan, which obviously takes into account all aspects of the plan, including the manner of distribution of funds among the various classes of creditors. As an example, take the case of a resolution plan which does not provide for payment of electricity dues. It is certainly open to the Committee of Creditors to suggest a modification to the prospective resolution applicant to the effect that such dues ought to be paid in full, so that the carrying on of the business of the corporate debtor does not become impossible for want of a most basic and essential element for the carrying on of such business, namely, electricity. This may, in turn, be accepted by the resolution applicant with a consequent modification as to distribution of funds, payment being provided to a certain type of operational creditor, namely, the electricity distribution company, out of upfront payment offered by the proposed resolution applicant which may also result in a consequent reduction of amounts payable to other financial and operational creditors. What is important is that it is the commercial wisdom of this majority of creditors which is to determine, through negotiation with the prospective resolution applicant, as to how and in what manner the corporate resolution process is to take place.”37. On the issue of jurisdiction of the Adjudicating Authority i.e. NCLT and the Appellate Tribunal i.e. NCLAT, it was held in Essar Steel (supra) as under:-

• “Jurisdiction of the Adjudicating Authority and the Appellate Tribunal

• 65. As has already been seen hereinabove, it is the Adjudicating Authority which first admits an application by a financial or operational creditor, or by the corporate debtor itself under Sections 7, 9 and 10 of the Code. Once this is done, within the parameters fixed by the Code, and as expounded upon by our judgments in Innoventive Industries Ltd. v. Icici Bank [Innoventive Industries Ltd. v. Icici Bank, (2018) 1 SCC 407 : (2018) 1 SCC (Civ) 356] and Macquarie Bank Ltd. v. Shilpi Cable Technologies Ltd. [Macquarie Bank Ltd. v. Shilpi Cable Technologies Ltd., (2018) 2 SCC 674 : (2018) 2 SCC (Civ) 288] , the Adjudicating Authority then appoints an interim resolution professional who takes administrative decisions as to the day to day running of the corporate debtor; collation of claims and their admissions; and the calling for resolution plans in the manner stated above. After a resolution plan is approved by the requisite majority of the Committee of Creditors, the aforesaid plan must then pass muster of the Adjudicating Authority under Section 31(1) of the Code. The Adjudicating Authority’s jurisdiction is circumscribed by Section 30(2) of the Code. In this context, the decision of this Court in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150: (2019) 4 SCC (Civ) 222] is of great relevance.

• 66. …………….

• 67. …..Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of Section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and Section 32 read with Section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar.

• 68. ……….

• 69. It will be noticed that the non obstante clause of Section 60(5) speaks of any other law for the time being in force, which obviously cannot include the provisions of the Code itself. Secondly, Section 60(5)(c) is in the nature of a residuary jurisdiction vested in NCLT so that NCLT may decide all questions of law or fact arising out of or in relation to insolvency resolution or liquidation under the Code. Such residual jurisdiction does not in any manner impact Section 30(2) of the Code which circumscribes the jurisdiction of the Adjudicating Authority when it comes to the confirmation of a resolution plan, as has been mandated by Section 31(1) of the Code. A harmonious reading, therefore, of Section 31(1) and Section 60(5) of the Code would lead to the result that the residual jurisdiction of NCLT under Section 60(5)(c) cannot, in any manner, whittle down Section 31(1) of the Code, by the investment of some discretionary or equity jurisdiction in the Adjudicating Authority outside Section 30(2) of the Code, when it comes to a resolution plan being adjudicated upon by the Adjudicating Authority. This argument also must needs be rejected.”

# 38. The Court also considered the amendment to Section 30(4) i.e. fourth proviso which was added to sub-section (4) which came into force from 23.11.2017, and observed as under: –

• “68. Suffice it to observe that the amended provision merely restates as to what the financial creditors are expected to bear in mind whilst expressing their choice during consideration of the proposal for approval of a resolution plan. No more and no less. Indubitably, the legislature has consciously not provided for a ground to challenge the justness of the “commercial decision” expressed by the financial creditors—be it to approve or reject the resolution plan. The opinion so expressed by voting is non-justiciable. Further, in the present cases, there is nothing to indicate as to which other requirements specified by the Board at the relevant time have not been fulfilled by the dissenting financial creditors. As noted earlier, the Board established under Section 188 of the I&B Code can perform powers and functions specified in Section 196 of the I&B Code. That does not empower the Board to specify requirements for exercising commercial decisions by the financial creditors in the matters of approval of the resolution plan or liquidation process. Viewed thus, the amendment under consideration does not take the matter any further.”

# 39. Again, a Three-Judge bench in Ghanashyam Mishra and Sons Private Limited through the Authorised Signatory vs. Edelweiss Asset Reconstruction Company Limited through the Director and Others,8 examined the legislative intent of making the RP binding on all the Stakeholders after it gets seal of approval from the Adjudicating Authority, and observed as under: –

• “64. It could thus be seen, that the legislature has given paramount importance to the commercial wisdom of CoC and the scope of judicial review by adjudicating authority is limited to the extent provided under Section 31 of the I&B Code and of the appellate authority is limited to the extent provided under sub-section (3) of Section 61 of the I&B Code, is no more res integra.

• 65. Bare reading of Section 31 of the I&B Code would also make it abundantly clear that once the resolution plan is approved by the adjudicating authority, after it is satisfied, that the resolution plan as approved by CoC meets the requirements as referred to in sub-section (2) of Section 30, it shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders. Such a provision is necessitated since one of the dominant purposes of the I&B Code is revival of the corporate debtor and to make it a running concern.”

40. Recently, this Court in Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited and Another,9 reiterating that the Adjudicating Authority is prohibited from second-guessing the commercial wisdom of the parties or directing unilateral modification to the RPs, as held in Essar Steel (supra) and K. Sashidhar (supra), further held as under-

• “157. These are binding precedents. Absent a clear legislative provision, this Court will not, by a process of interpretation, confer on the adjudicating authority a power to direct an unwilling CoC to renegotiate a submitted resolution plan or agree to its withdrawal, at the behest of the resolution applicant. The adjudicating authority can only direct the CoC to re-consider certain elements of the resolution plan to ensure compliance under Section 30(2) IBC, before exercising its powers of approval or rejection, as the case may be, under Section 31 [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531, para 73 : (2021) 2 SCC (Civ) 443] . In State of A.P. v. P. Laxmi Devi [State of A.P. v. P. Laxmi Devi, (2008) 4 SCC 720], while determining the constitutionality of a statute, this Court observed that it should be wary of transgressing into the domain of the legislature, especially in matters relating to economic and regulatory legislation. This Court observed : (P. Laxmi Devi case [State of A.P. v. P. Laxmi Devi, (2008) 4 SCC 720]

• “80. … As regards economic and other regulatory legislation judicial restraint must be observed by the court and greater latitude must be given to the legislature while adjudging the constitutionality of the statute because the court does not consist of economic or administrative experts. It has no expertise in these matters, and in this age of specialisation when policies have to be laid down with great care after consulting the specialists in the field, it will be wholly unwise for the court to encroach into the domain of the executive or legislative (sic legislature) and try to enforce its own views and perceptions.”

• 158. Judicial restraint must not only be exercised while adjudicating upon the constitutionality of the statute relating to economic policy but also in matters of interpretation of economic statutes, where the interpretative manoeuvres of the Court have an effect of transgressing into the law-making power of the legislature and disturbing the delicate balance of separation of powers between the legislature and the judiciary. Judicial restraint must be exercised in such cases as a matter of prudence, since the court neither has the necessary expertise nor the power to hold consultations with stakeholders or experts to decide the direction of economic policy. A court may be inept in laying down a detailed procedure for exercise of the power of withdrawal or modification by a successful resolution applicant without impacting the other procedural steps and the timelines under IBC which are sacrosanct. Thus, judicial restraint must be exercised while intervening in a law governing substantive outcomes through procedure, such as IBC. In this case, if resolution applicants are permitted to seek modifications after subsequent negotiations or a withdrawal after a submission of a resolution plan to the adjudicating authority as a matter of law, it would dictate the commercial wisdom and bargaining strategies of all prospective resolution applicants who are seeking to participate in the process and the successful resolution applicants who may wish to negotiate a better deal, owing to myriad factors that are peculiar to their own case. The broader legitimacy of this course of action can be decided by the legislature alone, since any other course of action would result in a flurry of litigation which would cause the delay that IBC seeks to disavow.”

# 41. What is “commercial wisdom” of CoC has been very aptly put by this Court in a latest decision in M.K. Rajagopalan vs. Dr. Periasamy Palani Gounder and Another (supra), which is worth reproducing: –

• “160. As noticed hereinbefore, commercial wisdom of CoC is given such a status of primacy that the same is considered rather a matter non-justiciable in any adjudicatory process, be it by the adjudicating authority or even by this Court. However, the commercial wisdom of CoC means a considered decision taken by CoC with reference to the commercial interests and the interest of revival of the corporate debtor and maximisation of value of its assets. This wisdom is not a matter of rhetoric but is denoting a well-considered decision by the protagonist of CIRP i.e. CoC. As observed by this Court in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] , the financial creditors forming CoC “act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision.” This Court also observed in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] that “[t]here is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan.”

• 161. These observations read with the observations in Essar Steel [Essar Steel India Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] with reference to the reasons stated in the Report of Bankruptcy Law Reforms Committee of November 2015, make it clear that commercial wisdom of CoC is assigned primacy in CIRP for it represents collective business decision, which is arrived at after thorough examination of the proposed resolution plan and assessment made with involvement of experts by the body of persons who are most vitally interested in rapid and efficient decision making. It follows as a necessary corollary that to be worth its name, the commercial wisdom of CoC would come into existence and operation only when all the relevant information is available before it and is duly deliberated upon by all its members, who have direct and substantial interest in the survival of corporate debtor and in the entire CIRP.

• 162. In light of the aforesaid position of law and its operation in relation to the decision-making process of CoC, it needs hardly any emphasis that each and every aspect relating to the resolution plan, and more particularly its financial layout, has to be before the CoC before it could be said to have arrived at a considered decision in its commercial wisdom.”

# 42. In view of the above legal position settled by this Court in the fleet of judgments, it is no more res integra that the legislature has given paramount importance to the “commercial wisdom” of CoC, and that the scope of the judicial review by the Adjudicating Authority (NCLT) is limited to the extent provided under Section 31, and that of the Appellate Authority (NCLAT) is limited to the extent provided under sub-section (3) of Section 61 of the IBC. After a RP is approved by the requisite majority of the CoC, it must pass the muster of Adjudicating Authority under Section 31(1) of the IBC. Section 31 also makes it abundantly clear that once the RP is approved by the Adjudicating Authority, after it is satisfied that the RP as approved by the CoC meets the requirements as referred to in sub-section (2) of Section 30, it shall be binding on the CD and its employees, members, creditors, guarantors and stakeholders. The legislature has consciously not provided for a ground to challenge the justness of the “commercial decision” taken by the Financial Creditors, because one of the dominant purposes of the IBC is revival of the CD and to make it a running concern.

# 43. While considering the feasibility and viability of the Prospective Resolution Plans, the CoC can always suggest a modification therein and exercise its commercial wisdom. However, once the RP is approved by the requisite majority of CoC, and when such RP is placed before the Adjudicating Authority for its approval under Section 31, the Adjudicating Authority has to only see whether such RP as approved by the CoC meets the requirements as referred to in Section 30(2). It is only where the Adjudicating Authority is satisfied that the RP does not confirm to the requirements of sub-section (1) of Section 31, it may by an order reject the RP. It is true that the NCLT has to decide all the questions on law or fact arising out of or in relation to the insolvency resolution or liquidation under the residuary jurisdiction vested in NCLT under Section 60(5), however as held in Essar Steel (supra), such residual jurisdiction does not in any manner impact Section 30(2) of the Code, which circumscribes the jurisdiction of the Adjudicating Authority, when it comes to the confirmation of RP, as has been mandated by Section 31(1) of the Code.

# 44. Similarly, the scope of interference by the Appellate Authority i.e., NCLAT under Section 61 in the Appeals arising out of the order approving a RP under Section 31, is also very limited and restricted to the specific grounds mentioned in sub-section (3) of Section 61. The grounds for filing Appeal under Section 61 have to be confined to sub-section (3) thereof.

# 45. Keeping in view the above settled legal position, let us deal with the three categories of Appeals separately.

[ Link Synopsis ]

Sanjeev Mahajan Vs. Indian Bank and Ors. - If the Committee of Creditors arbitrarily rejects a just settlement and/or withdrawal claim, NCLT, and thereafter, NCLAT can always set aside such decision under Section 60 of the Code.

 NCLAT (2024.08.20) in Sanjeev Mahajan   Vs. Indian Bank and Ors. [(2024) ibclaw.in 500 NCLAT, Company Appeal (AT) (Insolvency) No.1440 of 2024] held that; 

• If the Committee of Creditors arbitrarily rejects a just settlement and/or withdrawal claim, NCLT, and thereafter, NCLAT can always set aside such decision under Section 60 of the Code. For all these reasons, we are of the view that Section 12-A also passes constitutional muster.”

• It is, thus, noted by the CoC that when the Resolution Plan of the SRA is approved, the personal guarantees be still with the Bank and it is submitted by the learned Counsel for the Bank that total amount due is Rs.238 crores, hence, CoC after due deliberations decided not to accept the settlement proposal and approved the Resolution Plan.

• From the above, we are satisfied that the decision of the CoC, which was taken through e-voting declared on 08.01.2023, was well considered and deliberated decision, in which Appellant was given full opportunity. The decision, which was taken with 100% vote share on 08.01.2023 to reject the settlement proposal of the Appellant, can in no manner be held to be arbitrary.

• It could thus be seen that this Court has found that if the CoC arbitrarily rejects a just settlement and/or withdrawal claim, the learned NCLT and thereafter the learned Nclat can always set aside such decision under the provisions of IBC.”

• It could thus be seen that this Court has found that if the CoC arbitrarily rejects a just settlement and/or withdrawal claim, the learned NCLT and thereafter the learned Nclat can always set aside such decision under the provisions of IBC.

• The Hon’ble Supreme Court has held that a withdrawal under Section 12-A is distinguishable both from a Resolution Plan, which is approved under Section 31 and a scheme which is sanctioned under Section 230 of the Companies Act, 2013.

Excerpts of the Order;

This Appeal by Shareholder and Promoter of the Corporate Debtor Nimitaya Hotel & Resorts Pvt. Ltd. has been filed challenging order dated 03.07.2024 passed by National Company Law Tribunal, Court V, New Delhi, rejecting IA No.2594 of 2023 filed by the Appellant.

# 2. Brief facts and sequence of events giving rise to this Appeal need to be noted:

(i) The Corporate Debtor has taken various financial facilities from the Indian Bank (erstwhile Allahabad Bank). Section 7 Application was filed by the Indian Bank being CP(IB) No.1913/2019, which Application was admitted by order dated 24.12.2021 passed by the Adjudicating Authority.

(ii) The Appellant filed Company Appeal (AT) (Insolvency) No.03 of 2022, challenging order dated 24.12.2021 before this Tribunal. Company Appeal (AT) (Insolvency) No.03 of 2022 was disposed of by this Tribunal by judgment dated 04.07.2022, permitting the Appellant to file fresh application under Section 12-A to the Interim Resolution Professional (“IRP”)/ Resolution Professional (“RP”) for placing it before the Committee of Creditors (“CoC”) containing offer of more than Rs.81 crores.

(iii) After order dated 04-07-2022, the Appellant submitted settlement proposal, which was not approved by the CoC. An IA No.3410 of 2022 was filed by the Appellant in Company Appeal (AT) (Insolvency) No.03 of 2022. A Contempt Application was also filed by the Appellant alleging contempt of the order dated 04.07.2022. The Contempt Application was dismissed by this Tribunal by order dated 21.11.2022, however, IA No.3410 of 2022 was disposed of by this Tribunal observing that Appellant, who has submitted a settlement proposal is entitled to participate in the deliberations and negotiations undertaken by the Coc and the CoC can very well ask the Resolution Applicant to revise their Plan. Similarly, the Appellant can always be asked to revise his proposal to match the Resolution Applicant’s offer. IA No.3410 of 2022 was disposed of accordingly.

(iv) After order dated 21.11.2022, the Appellant submitted a revised settlement proposal vide letter dated 25.11.2022, offering an amount of Rs.100 crores with the timeline for payment. The revised settlement proposal submitted by the Appellant dated 25.11.2022 along with the Resolution Plan submitted by the Successful Resolution Applicant (“SRA”), came to be considered by the CoC in 13th CoC meeting held on 26.11.2022 and 14th CoC meeting held on 07.12.2022. The settlement proposal submitted by the Appellant as well as the Resolution Plan submitted by SRA was deliberated and decision was taken to put both the proposals for e-voting. The Resolution Plan of SRA as well as revised settlement proposal of the Appellant was placed for e-voting and as per the result of the e-voting declared on 08.01.2023, the Resolution Plan having value of 120.01 crores submitted by Nehru Place Hotels and Real Estates Pvt. Ltd. (Respondent No.3 herein) was approved with 100% vote share and the CoC by 100% vote share rejected the Settlement Plan of the Appellant.

(v) After approval of the Plan by the CoC, the RP filed an Application before the Adjudicating Authority on 19.01.2023 for approval of the Resolution Plan. The 330 days period of CIRP as extended from time to time, came to an end on 28.01.2023. After approval of the Plan, the Appellant sent proposal dated 21.03.2023, submitting a proposal of Rs.118.25 crores. The RP forwarded the proposal submitted by the Appellant to the CoC.

(vi) An IA No.259 of 2023 was filed by the Appellant in disposed of Company Appeal (AT) (Insolvency) No.03 of 2022, raising his grievance that Appellant has not been able to meet the Chairman-cum-Managing Director of the Bank. This Tribunal vide order dated 03.02.2023, disposed of, IA No.259 of 2023 observing that it is open for the Applicant/ Appellant to make such application, as permissible in law, before the Adjudicating Authority for consideration of his grievance, if any. It was, however, observed that no case has been made out to pass any further order in IA No.259 of 2023. Against the above order dated 03.02.2023 passed by this Tribunal, the Appellant filed Civil Appeal No.1705 of 2023 before the Hon’ble Supreme Court, which Appeal was also disposed of on 20.03.2023, noticing the liberty granted by Appellate Tribunal to approach the National Company Law Tribunal.

(vii) The proposal which was submitted by the Appellant after approval of the Resolution Plan of the SRA, was declined by the Indian Bank vide email dated 05.05.2023 to the Appellant. The Appellant filed IA No.2594 of 2023 before the Adjudicating Authority, wherein following prayers were made:

“a) Allow the instant Application and direct the Respondent/ Competent Authority to negotiate, deliberate and take a decision on the settlement proposal U/s 12-A dated 21.03.2023 given by the Applicant and/or;

b) Pass an ad-interim ex-parte stay on any further proceedings in the application bearing I.A. No. 1358/23 preferred by the Resolution Professional for approval of Resolution Plan pending before the Ld. Adjudicating Authority till the pendency of the present I.A. ; and/or;

c) Pass any further order(s) in the interest of justice.”

(viii) IA No.2594 of 2023 was opposed by both the RP as well as SRA. The Adjudicating Authority has passed an order on 01.12.2023 in IA No.2594 of 2023, giving a last opportunity to the Appellant so that any acceptable settlement can be arrived. Order dated 01.12.2023 passed by Adjudicating Authority in IA No.2594 of 2023 was challenged by the SRA (Respondent No.3) by means of Company Appeal (AT) (Insolvency) Nos.1715-1716 of 2023, which Appeal was disposed of by this Tribunal on 08.01.2024, deleting the part of the order, by which opportunity was granted to the Appellant for arriving at any acceptable settlement. This Tribunal observed that Adjudicating Authority may proceed to decide IA No.2594 of 2023 as well as IA No.987 of 2023 filed for approval of the Resolution Plan.

(ix) After the above order of this Tribunal dated 08.01.2024, the Adjudicating Authority heard the Appellant as well as RP and SRA on IA No.2594 of 2023 and by the impugned order, dismissed the IA. Aggrieved by which order, this Appeal has been filed by the Appellant.

# 3. We have heard Shri Abhijeet Sinha, learned Senior counsel appearing for the Appellant; Shri Rajesh Kumar Gautam, learned Counsel appearing for Indian Bank; Shri Manju Nagrath, learned Counsel appearing for RP; and Shri Ajay Kumar, learned Counsel appearing for SRA.

# 4. The learned Counsel for the Appellant challenging the order rejecting IA No.2594 of 2023 submits that the Appellant, who is a Promoter and Shareholder of the Corporate Debtor, having offered an amount, which is higher to the Resolution Plan value of the SRA, the Bank acted arbitrarily in not accepting the said proposal. The email sent by the Bank of 05.05.2023 that amount offered by the Appellant is too low, does not reflect any consideration. It is submitted that the Corporate Debtor being MSME and the Appellant has been making repeated offers for settlement, which was not illegal, the same has not been accepted by the sole Member of the CoC, i.e., Indian Bank. It is submitted that the Adjudicating Authority in rejecting the Application has relied on the commercial wisdom of the CoC. With regard to rejection of the settlement proposal submitted by the Appellant, it is submitted that when the decision of CoC to reject the settlement offer given under 12-A is arbitrary, it is well settled that the said decision can be successfully challenged before the Adjudicating Authority. It is submitted that an arbitrary decision of the CoC cannot be saved in the name of commercial wisdom of the CoC. It is submitted that sole Member of the CoC has not given any heed to the settlement proposal given by the Appellant, who is desirous of revival of the Corporate Debtor. It is submitted that IA No.2594 of 2023 was filed by the Appellant due to liberty granted by this Tribunal vide its order dated 03.02.2023 in IA No.259 of 2023.

# 5. Shri Rajesh Kumar Gautam, learned Counsel for the Indian Bank, refuting the submission of learned Counsel for the Appellant submits that Appellant’s settlement proposal submitted under Section 12-A, which was submitted by letter dated 25.11.2022 was considered by the CoC, as per order passed by this Tribunal on 04.07.2022 and 21.11.2022 in 13th CoC meeting held on 26.11.2022 and 14th CoC meeting held on 07.12.2022. The Resolution Plan submitted by the SRA as well as the settlement proposal submitted by the Appellant of Rs.100 crores were put to vote and on the basis of e-voting, the result of which was declared on 08.01.2023, the Resolution Plan of SRA, which was a Plan value of Rs.120.01 crores was approved with 100% vote share of the CoC. The CoC having considered the settlement plan, after due deliberation has not accepted the settlement proposal of the Appellant, no grievance can be raised by the Appellant. It is submitted that Appellant in its settlement proposal has stated that on approval of Resolution Plan by the Adjudicating Authority, entire liability of the CD shall extinguish and the CD, its Promoter and Guarantors shall not be liable to make any further payments towards the outstanding amount to the Financial Creditor. It is submitted that the Appellant in the appeal has concealed the aforesaid part of the offer by the Appellant and it was noticed by the CoC in its 14th meeting held on 07.12.2022. The CoC deliberated and duly compared both, the Resolution Plan as well as settlement proposal and found the settlement proposal not acceptable. It is submitted that after approval of Resolution Plan on 08.01.2023, there was no occasion for the Appellant to send further settlement offers as sent by the Appellant on different dates, including the offer made by letter dated 21.03.2023 for Rs.118.26 crores. It is submitted that the Resolution Plan having been approved and settlement proposal submitted by the Appellant being considered and deliberated, there is no right left to the Appellant to make repeated offers. More so, when an Application was already filed before the Adjudicating Authority for approval of the Resolution Plan, which was approved on 08.01.2023. It is submitted that the Bank vide its email dated 05.05.2023 to the Appellant, communicated that proposal dated 21.03.2023 for Rs.118.26 crores cannot be accepted. It is submitted that by different letters including letter dated 28.08.2023 and 10.10.2023, the Appellant made further proposals and on 10.10.2023, it has offered Rs.120 crores.

# 6. It is submitted learned Counsel for Respondent No.1 that the Appellant has engaged the Financial Creditor in several litigations. Two writ petitions were been filed before the Delhi High Court, which were dismissed. The Appellant has also come four times to this Tribunal by filing Appeals and Applications. The Appellant has also filed Appeals to the Hon’ble Supreme Court at two occasions. It is submitted that the CoC has deliberated and considered the settlement proposal submitted by the Appellant and did not accept the same, there is no arbitrariness in the decision of the Bank. The amount due on the CD’s is Rs.238 crores and by accepting the settlement proposal, the CoC could not have relinquished the obligation of the Promoters and Guarantors. There is no merit in the Appeal and the Appeal deserves to be dismissed. The learned Counsel for the Indian Bank has also filed an additional affidavit, which was permitted by this Tribunal.

# 7. The learned Counsel for the RP has filed an additional affidavit. Learned Counsel for the RP refuted the submissions of the Appellant and submitted that Appellant’s revised settlement offer dated 25.11.2022 was placed before the CoC and deliberated on 13th and 14th CoC meetings and the settlement proposal of the Appellant was put to vote and was rejected with 100% vote share of the CoC on 08.01.2023. The Resolution Plan submitted by Respondent No.3 was approved with 100% vote share of the CoC. The period of 330 days, after expiry of the CIRP, came to an end on 28.01.2023 and after the CIRP period having come to an end, the settlement proposal of the Appellant having been considered and rejected, there is no right in the Appellant to submit repeated offers, after coming to know about the offer of SRA, which was approved on 08.01.2023. It is submitted that the offer, which was sent by the Appellant on 21.03.2023, was forwarded by the RP to the CoC Member, which was declined on 05.05.2023. The order of this Tribunal dated 03.02.2023, did not entitle the Appellant to submit fresh settlement proposal and the offers sent thereafter are wholly unacceptable. IA No.2594 of 2023 filed by the Appellant has rightly been rejected by the Adjudicating Authority. It is submitted that this Tribunal while deciding Company Appeal (AT) (Insolvency) Nos.1715-1716 of 2023 in the matter of Nehru Place Hotels and Real Estates Pvt. Ltd. vs. Sanjeev Mahajan & Ors. has clarified the import of the order dated 03.02.2023, which does not entitle the Appellant to submit fresh proposal. It is submitted that there is no merit in the Appeal and the Appeal deserves to be dismissed.

# 8. We have considered the submissions of learned Counsel for the parties and have perused the record.

# 9. As noted above, the Appellant has earlier challenged the order dated 24.12.2021 admitting Section 7 Application in Company Appeal (AT) (Insolvency) No.03 of 2022. The Appellant in the Appeal has submitted OTS offer and was ready to give offer for the amount for which Bank was taking steps to transfer the debt to non-banking financial company. The Company Appeal (AT) (Insolvency) No.03 of 2022 was disposed of by order dated 04.07.2022 and following directions were issued in paragraph-15, which are as follows:

• “15. In view of the foregoing discussions, we dispose of this Appeal with following directions:-

• (i) Appellant shall submit a fresh Application under Section 12A to the IRP/ RP for placing it before the CoC which contains an offer of more than Rs.81 Crores.

• (ii) The said Application shall be filed within two weeks from this date.

• (iii) The CoC shall consider the Application under Section 12A after obtaining approval of the Competent Authority of the Bank keeping into consideration the factors as have been mentioned in paragraph 14, as above.

• (iv) The CoC shall complete the process of taking decision on Section 12A Application within a period of two months from this date. For a period till CoC takes a decision on a proposal under Section 12A, CoC may not put any Resolution Plans, if any, to vote.”

# 10. Subsequent to the order of this Tribunal dated 04.07.2022, the Appellant again filed an IA No.3410 of 2022 in Company Appeal (AT) (Insolvency) No.03 of 2022 stating that the Appellant has submitted its settlement proposal, where the Appellant asked the CoC to disclose the Resolution Plan. It was pleaded by the Appellant that Appellant is not permitted to participate and negotiate with the CoC. IA No.3410 of 2022 was disposed of by this Tribunal on 21.11.2022 observing that proposal of Applicant under Section 12-A for settlement has naturally to be weighed against the Resolution Plans received in the process. While disposing of the Application, following observations were made in paragraph 15 by this Tribunal, which are as follows:

• “15. The 06th, 07th and 08th CoC Meetings which have been brought on record in the Contempt Application clearly indicate the substantial part of discussions in the minutes of the CoC where with regard to the interpretation of the Order of this Tribunal dated 04.07.2022, there was divergence in the views of the Resolution Professional and the CoC with regard to the interpretation of the Order dated 04.07.2022. The Appellant has filed this Application with the prayers as noted above. The Order dated 04th July, 2022 contemplated that CoC while considering the Application under Section 12A was to keep in mind the factors as has been mentioned in paragraph 14 of the Judgment dated 04.07.2022. It has already been noticed in the Judgement that maximisation of the assets of the Corporate Debtor is one of the objectives and equally important is recovery of the financial dues of the Bank. The proposal of Applicant under section 12A for Settlement has naturally to be weighed against the Resolution Plans received in the process unless the Resolution Plans are opened and deliberated side by side with the proposal of settlement submitted by the Appellant, the objective as contemplated in paragraph 14(iii) cannot be achieved. We thus are of the view that the Order dated 04.07.2022 clearly entitled that the CoC to weigh the Resolution Plans as well as Settlement Proposal together.”

# 11. Subsequent to the order of this Tribunal dated 21.11.2022, 13th meeting of the CoC was held on 26.11.2022, where the CoC noticed the order dated 21.11.2022 of the Appellate Tribunal and also taken note of the revised settlement proposal submitted by the Appellant (25.11.2022). The Appellant, who was present in the meeting, the CoC deliberated upon his proposal. The 14th CoC meeting was held on 07.12.2022. The Adjudicating Authority in the impugned order has noted deliberations of the CoC in 13th, 14th, 15th and 16th CoC meetings. It is useful to quote paragraph 13 of the impugned order, where the relevant extracts of the CoC has been noticed, which are as follows: . . . . . .

# 12. When we look into the 14th CoC meeting, it is clear that at Agenda Item No.A-4, Resolution Plan submitted by Resolution Applicant along with settlement proposal submitted by the Appellant – Promoter came for consideration. It is useful to quote the following extract of 14th CoC meeting:

• “…

• The Indian Bank again inquired the promoter, if he wishes to improve/revise his offer as he has been a party to all the CoC meetings and is aware of the amount offered by the other two resolution Applicants to the financial Creditor, to which the promoter replied that he has submitted his best offer which is unconditional and the same is on as is where is …

• Indian Bank put forth that in case the Bank accepts the Settlement Proposal it will be releasing the guarantees held with the bank to the promoter which shall not be there in case of the resolution plan, therefore, upon comparison of the Resolution Plan and the Settlement Proposal, the Settlement Proposal given by the promoter is not in compete with the resolution plan received.

• After detailed deliberation and discussion upon the feasibility and viability of the resolution plans as received from the resolution Applicants and the proposal of promoter u/s 12, CoC asked the RP to put all 3 proposals to vote.”

# 13. From the above minutes, it is clear that Bank has also asked the Appellant whether he is ready to increase his offer, where the Appellant has intimated that he has submitted its best offer. The minutes of the 14th CoC also notices that the Bank noted in the minutes that if the Bank accept the settlement proposal, it will have to release the guarantees held with the Bank to the Promoters, which shall not be there in case of Resolution Plan submitted by Respondent No.3 is approved. The minutes clearly record “therefore, upon comparison of the Resolution Plan and the Settlement Proposal, the Settlement Proposal given by the promoter is not in compete with the resolution plan received”.

# 14. In pursuance of the Resolution taken on 14th CoC meeting, e-voting was completed on both the Resolution on 08.01.2023 and as per the result of the e-voting, the Resolution Plan submitted by SRA was approved with 100% vote share, whereas the settlement proposal submitted by the Appellant was rejected with 100% vote share. It was after the approval of Resolution Plan on 08.01.2023, an Application was filed by the RP before the Adjudicating Authority for approval of the Resolution Plan. As noted above, after the approval of the Resolution Plan and rejection of settlement proposal of the Appellant by the CoC, an IA No.259 of 2023 was filed by the Appellant in the disposed of Company Appeal (AT) (Insolvency) No.03 of 2022 before this Tribunal, which IA came to be decided on 03.02.2023. In IA No.259 of 2023, following order was passed by this Tribunal on 03.02.2023:

• “03.02.2023:

• I.A. No. 259 of 2023

• This Interlocutory Application has been filed by the Appellant in disposed of Company Appeal (AT)(Insolvency) No. 03 of 2022 which was disposed of by this Tribunal’s Judgment dated 04.07.2022. Subsequently, another order was passed by this Tribunal on 21.11.2022 in I.A. No. 3410 of 2022 filed by the Appellant. The Applicant/Appellant has come up with in this Application claiming that the Applicant/Appellant was not given opportunity to meet the Chairman-cum-Managing Director, who is the Competent Authority for considering the proposal of the Applicant/Appellant who is an MSME. By our order 21.11.2022, we have already made necessary clarification with regard to earlier judgment dated 04.07.2022.

• Learned Counsel for the Bank submits that in accordance with the order passed by this Tribunal dated 04.07.2022 and 21.11.2022, all steps were taken by CoC. Learned Counsel for the Applicant submits that after 20.01.2023, the Applicant/Appellant has also made efforts to meet the Chairman-cum-Managing Director, but he was unsuccessful. Learned Counsel for Bank submits that CoC has already approved the Resolution Plan during the pendency of this Application.

• We are of the view that it is open for the Applicant/Appellant to make such application, as permissible in law, before the Adjudicating Authority for consideration of this grievance, if any. Learned Counsel for the Applicant/Appellant submits that he is making offer higher than the Successful Resolution Applicant, whose plan has been approved. It is open for the Applicant to place his plea, as admissible in law, before the Adjudicating Authority.

• We are of the view that no case has been made out to make further order in I.A. No. 259 of 2023. Any Application filed by the Applicant shall be considered in accordance with law by the Adjudicating Authority.

• Contempt Case (AT) No. 07 of 2023

• Learned Counsel for the Applicant/Appellant submits that he does not want to prosecute the Contempt Application. Contempt Application is, therefore, closed.”

# 15. It appears after order dated 03.02.2023, the Appellant has sent various other proposals, which have been noted above, including the offer submitted on 21.03.2023 for an amount of Rs.118.26 crores, which was declined by the Indian Bank by communication dated 05.05.2023. It was thereafter, an IA No.2594 has been filed by the Appellant, which came to be decided by the impugned order by the Adjudicating Authority. We have already noticed the prayer in the IA, which were to set aside the decision of Indian Bank on the settlement proposal dated 21.03.2023 and stay further proceedings in IA No.987 of 2023, which was filed by the RP for approval of the Resolution Plan.

# 16. We have already noticed above that in IA No.2594 of 2023, an order was passed by the Adjudicating Authority on 01.12.2023, which came to be challenged by SRA by means of Company Appeal (AT) (Insolvency) Nos.1715- 1716 of 2023, which Appeal came to be disposed of by this Tribunal on 08.01.2023, after hearing the learned Counsel for present Appellant, who Respondent No.1, in the said Appeal. In the above judgment, this Tribunal had occasion to refer to the order dated 03.02.2023 passed by this Tribunal in IA No.259 of 2023, it was observed by this Tribunal in its judgment dated 08.01.2024 that order dated 03.02.2023 cannot be read to mean that this Tribunal granted liberty to Respondent No.1 to submit any further proposal for settlement. It is useful to extract paragraphs 14 and 15 of the judgment, which are as follows:

• “14. From the facts as noticed above it is clear that Resolution Plan of the Appellant was approved with 100% vote share and settlement proposal submitted by Respondent No. 1 under 12A of the Code was considered under the order of this Tribunal in 14th CoC meeting and rejected with 100% vote share on 08th January, 2023.

• 15. Learned Sr. Counsel for the Respondent No. 1 has placed reliance on order of this Tribunal dated 03.02.2023 passed in I.A. No. 259 of 2023. According to Respondent No.1 I.A. No. 259 of 2023 has been filed due to liberty granted by this Tribunal. When we look into the order dated 03.02.2023 of this Tribunal, it is clear that this Tribunal only observed that it is open to the Applicant (Respondent No. 1 herein) to make such an application as permissible in law for consideration of his grievance before the Adjudicating Authority. The Order dated 03.02.2023 cannot be read to mean that this Tribunal granted liberty to Respondent No. 1 to submit any further proposal for settlement. The Order dated 03.02.2023 can be read only to mean at best the Respondent No. 1 can raise his grievance by an application before the Adjudicating Authority. Application has been filed being I.A. No. 2594 of 2023 and prayer made to set aside the communication dated 06.05.2023 issued by the CoC rejecting his proposal. When we look into the Impugned Order, the Adjudicating Authority made following observations:

• “….CoC has already approved the Resolution Plan which is pending for consideration of this Adjudicating Authority. Suspended Management has filed certain applications proposing higher amount than proposed by the SRA for consideration of the CoC. Since, the matter is an old one, last opportunity is granted, so that any acceptable settlement can be arrived. If no settlement arises before the next date of hearing, the Resolution Plan will be heard on merits…..”

# 17. When we look into the IA, which was filed by the Appellant being IA No.2594 of 2023, what is questioned by the Appellant is rejection of its proposal, which was submitted on 21.03.2023, enhancing its Plan value as Rs.118.26 crores. The submission, which has been pressed by Shri Abhijeet Sinha, is that the Adjudicating Authority in the impugned order has not considered the submissions, which was advanced by the Appellant on the ground that rejection of settlement proposal of the Appellant is in accordance with the commercial wisdom of the CoC and the same cannot be questioned before the Adjudicating Authority. The learned Counsel for the Appellant submits that it has been laid down by the Hon’ble Supreme Court in Swiss Ribbons Pvt. Ltd. and anr. vs. Union of India and Ors. – (2019) 4 SCC 17 that an arbitrary decision of the CoC, rejecting proposal under Section 12-A can be challenged. The learned Counsel for the Appellant has referred to paragraph 83 of the judgment. The Hon’ble Supreme Court in the above judgment has held that if the Committee of Creditors arbitrarily rejects a just settlement and/ or withdrawal claim, NCLT, and thereafter NCLAT can always set aside such judgment. In paragraph 83, following was observed:

• “83. The main thrust against the provision of Section 12-A is the fact that ninety per cent of the Committee of Creditors has to allow withdrawal. This high threshold has been explained in the ILC Report as all financial creditors have to put their heads together to allow such withdrawal as, ordinarily, an omnibus settlement involving all creditors ought, ideally, to be entered into. This explains why ninety per cent, which is substantially all the financial creditors, have to grant their approval to an individual withdrawal or settlement. In any case, the figure of ninety per cent, in the absence of anything further to show that it is arbitrary, must pertain to the domain of legislative policy, which has been explained by the Report (supra). Also, it is clear, that under Section 60 of the Code, the Committee of Creditors do not have the last word on the subject. If the Committee of Creditors arbitrarily rejects a just settlement and/or withdrawal claim, NCLT, and thereafter, NCLAT can always set aside such decision under Section 60 of the Code. For all these reasons, we are of the view that Section 12-A also passes constitutional muster.”

# 18. The question which needs to be considered in the present case is as to whether the decision of the CoC, not to accept the settlement proposal submitted by the Appellant, can be said to be an arbitrary decision. It is submitted that the revised settlement proposal, which was submitted by the Appellant on 25.11.2022, came to be considered in 13th and 14th CoC meetings. The revised settlement proposal, which has been brought on the record by RP as well as learned Counsel for Indian Bank, categorically states that on approval of settlement proposal submitted by the Appellant, there shall be no liability left with the CD or its Promoter/ Guarantors. It is useful to extract the following from the settlement proposal dated 25.11.2022, which is filed as Annexure R-1 to the additional affidavit filed by the Bank. Following was stated in the settlement proposal of the Appellant dated 25.11.2022:

• “Needless to mention that upon approval and implementation of the present offer, the entire outstanding / debt of Bank as a whole shall stand discharged and no due shall remain recoverable, all legal proceedings shall be withdrawn immediately on remittance of 25% of our offer amount. Payment of remaining INR 75 Crore on or before 31st March, 2023 the entire liability of CD shall stand extinguished. CD and/ or Promoters/ Guarantors shall not be liable to make any further payment towards the outstanding amount to the FC. The FC shall issue a letter confirming the closure of the loan Account.”

# 19. Thus, the settlement proposal submitted by the Appellant was with the condition that on approval of the same, liability of CD, Promoter and Guarantors shall stand extinguished, meaning thereby that the Bank has to release the personal guarantees of Promoter and Guarantors, which part of the proposal was duly considered in the 14th CoC meeting and relevant extract from 14th CoC meeting has already been extracted above, which indicates that the settlement proposal in which the Bank has to release the guarantees held with the Bank is not in compete with the Resolution Plan received. It is, thus, noted by the CoC that when the Resolution Plan of the SRA is approved, the personal guarantees be still with the Bank and it is submitted by the learned Counsel for the Bank that total amount due is Rs.238 crores, hence, CoC after due deliberations decided not to accept the settlement proposal and approved the Resolution Plan.

# 20. From the above, we are satisfied that the decision of the CoC, which was taken through e-voting declared on 08.01.2023, was well considered and deliberated decision, in which Appellant was given full opportunity. The decision, which was taken with 100% vote share on 08.01.2023 to reject the settlement proposal of the Appellant, can in no manner be held to be arbitrary.

21. When the settlement proposal, which was submitted by the Appellant, which came to be considered by the CoC and was rejected, it is not open for the Appellant, after the approval of Resolution Plan of the SRA and after rejection of settlement proposal of the Appellant by CoC, to sent emails increasing his offer from earlier submitted settlement proposal. The RP has stated in the affidavit that period of 330 days of the CIRP has come to an end on 28.01.2023. The CIRP has come to an end and settlement proposal submitted by the Appellant was duly deliberated and rejected by 100% vote share, it is not open for the Appellant to submit offer increasing his settlement value, after approval of the Plan. We have also observed that order dated 03.02.2023, which was passed by this Tribunal in IA No.259 of 2023, filed in the disposed of Appeal, did not entitle the Appellant to file fresh proposal, nor any liberty was granted by this Tribunal to the Appellant to start filing fresh proposals after completion of the CIRP period and after rejection of the settlement proposal of the Appellant.

# 22. Learned Counsel for the Appellant has also placed reliance on the judgment of the Hon’ble Supreme Court in Vallal RCK vs. Siva Industries and Holdings Ltd. and Ors. – (2022) 9 SCC 803, where paragraph 83 of the Swiss Ribbons Pvt. Ltd. has also been quoted with approval. Paragraphs 19 and 20 of the above judgment are as follows:

• “19. In Swiss Ribbons (P) Ltd. v. Union of India [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17] , one of the challenges made was with regard to validity of Section 12-A IBC. It was argued that the figure of 90% voting share was arbitrary. It was the contention that though the withdrawal was just and proper, the CoC could exercise the power arbitrarily to reject such a settlement. While rejecting the said contention, this Court observed thus : (SCC p. 87, para 83)

• “83. The main thrust against the provision of Section 12-A is the fact that ninety per cent of the Committee of Creditors has to allow withdrawal. This high threshold has been explained in the ILC Report as all financial creditors have to put their heads together to allow such withdrawal as, ordinarily, an omnibus settlement involving all creditors ought, ideally, to be entered into. This explains why ninety per cent, which is substantially all the financial creditors, have to grant their approval to an individual withdrawal or settlement. In any case, the figure of ninety per cent, in the absence of anything further to show that it is arbitrary, must pertain to the domain of legislative policy, which has been explained by the Report (supra). Also, it is clear, that under Section 60 of the Code, the Committee of Creditors do not have the last word on the subject. If the Committee of Creditors arbitrarily rejects a just settlement and/or withdrawal claim, NCLT, and thereafter, NCLAT can always set aside such decision under Section 60 of the Code. For all these reasons, we are of the view that Section 12-A also passes constitutional muster.”  (emphasis in original)

• # 20. It could thus be seen that this Court has found that if the CoC arbitrarily rejects a just settlement and/or withdrawal claim, the learned NCLT and thereafter the learned Nclat can always set aside such decision under the provisions of IBC.”

# 23. There cannot be any quarrel to the proposition laid down by the Hon’ble Supreme Court in the above case. If the CoC arbitrarily rejects a settlement proposal, the same can be interfered with in an appropriate case by the Adjudicating Authority as well as by this Tribunal. However, in the present case, the decision of not accepting the settlement proposal was well considered, as noted above. Hence, the above judgment of the Hon’ble Supreme Court in no manner helps the Appellant.

# 24. The learned Counsel for the Appellant has also referred to and relied on the judgment of the Hon’ble Supreme Court in Arun Kumar Jagatramka vs. Jindal Steel and Power Limited and Anr. – (2021) 7 SCC 474, where while considering the provisions of Section 12-A and Regulation 30-A, following was observed by Hon’ble Supreme Court in paragraph 78:

• “78. There is a fundamental fallacy in the submission. An application for withdrawal under Section 12-A is not intended to be a culmination of the resolution process. This, as the statutory scheme would indicate, is at the inception of the process. Rule 8 of the Adjudicating Authority Rules, as we have seen earlier, contemplates a withdrawal before admission. Section 12-A subjects a withdrawal of an application, which has been admitted under Sections 7, 9 and 10, to the requirement of an approval of ninety per cent voting shares of the CoC. The decision of this Court in Swiss Ribbons [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17] (para 82 extracted above) stipulates that where the CoC has not yet been constituted, NCLT, functioning as the adjudicating authority, may be moved directly for withdrawal which, in the exercise of its inherent powers under Rule 11 of the Adjudicating Authority Rules, may allow or disallow the application for withdrawal or settlement after hearing the parties and considering the relevant factors on the facts of each case. A withdrawal in other words is by the applicant. The withdrawal leads to a status quo ante in respect of the liabilities of the corporate debtor. A withdrawal under Section 12-A is in the nature of settlement, which has to be distinguished both from a resolution plan which is approved under Section 31 and a scheme which is sanctioned under Section 230 of the 2013 Act. A resolution plan upon approval under Section 31(1) IBC is binding on the corporate debtor, its employees, members, creditors (including the Central and State Governments), local authorities, guarantors and other stakeholders. The approval of a resolution plan under Section 31 results in a “clean slate”, as held in the judgment of this Court in Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] . Rohinton F. Nariman, J. speaking for the three-Judge Bench of this Court, observed : (Essar Steel case [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] , SCC p. 615, para 105)

• “105. Section 31(1) of the Code makes it clear that once a resolution plan is approved by the Committee of Creditors it shall be binding on all stakeholders, including guarantors. This is for the reason that this provision ensures that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate as it were. In SBI v. V. Ramakrishnan [SBI v. V. Ramakrishnan, (2018) 17 SCC 394 : (2019) 2 SCC (Civ) 458] , this Court relying upon Section 31 of the Code has held : (SCC p. 411, para 25)

• ‘25. Section 31 of the Act was also strongly relied upon by the respondents. This section only states that once a resolution plan, as approved by the Committee of Creditors, takes effect, it shall be binding on the corporate debtor as well as the guarantor. This is for the reason that otherwise, under Section 133 of the Contract Act, 1872, any change made to the debt owed by the corporate debtor, without the surety’s consent, would relieve the guarantor from payment. Section 31(1), in fact, makes it clear that the guarantor cannot escape payment as the resolution plan, which has been approved, may well include provisions as to payments to be made by such guarantor. This is perhaps the reason that Annexure VI(e) to Form 6 contained in the Rules and Regulation 36(2) referred to above, require information as to personal guarantees that have been given in relation to the debts of the corporate debtor. Far from supporting the stand of the respondents, it is clear that in point of fact, Section 31 is one more factor in favour of a personal guarantor having to pay for debts due without any moratorium applying to save him.’”     (emphasis supplied)”

# 25. There can be no quarrel to the proposition laid down by the Hon’ble Supreme Court in the above case with regard to scheme under Section 12-A. The Hon’ble Supreme Court has held that a withdrawal under Section 12-A is distinguishable both from a Resolution Plan, which is approved under Section 31 and a scheme which is sanctioned under Section 230 of the Companies Act, 2013. We fail to see as to how the judgment of the Hon’ble Supreme Court in Arun Kumar Jagatramka’s case come to any aid to the Appellant in the facts of the present case.

# 26. In view of the foregoing discussions and our conclusions, we are of the view that Adjudicating Authority did not commit any error in rejecting IA No.2594 of 2023 filed by the Appellant. There is no error in the judgment of the Adjudicating Authority, the Appeal being devoid of merit is dismissed.

There shall be no order as to costs.

-----------------------------------------------