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Judgment
Ashok Bhushan, J.
This Appeal by a Successful Resolution Applicant (SRA) has been filed challenging the Order dated 18.10.2024 passed by the Adjudicating Authority (National Company Law Tribunal, Division Bench, (Court – II), Kolkata) in IA (IB) No. 237/KB/2022 in C.P. (IB) No. 184/KB/2018. By the Impugned Order, the Adjudicating Authority has allowed and disposed of IA (IB) 237/KB/2022 filed by Resolution Professional (RP) for approval of the Resolution Plan which was submitted by the Appellant. The Appellant aggrieved by the approval of the Resolution Plan has come up in the Appeal.
Brief facts of the case necessary to be noticed for deciding the Appeal are:
CIRP against the Corporate Debtor, Duncan Industries Limited commenced vide Order dated 05.03.2020.
On 18.09.2020, `Form-G’ was published. Information Memorandum was issued by the RP on 10.10.2020, which reflected the status of 12 Tea Gardens, which as the Assets of the Corporate Debtor.
In pursuance of `Form-G’, Resolution Plans were submitted.
Appellant was also one of the Resolution Applicants who has submitted Resolution Plan. Resolution Plan of the Appellant came to be approved by Committee of Creditors (CoC) with 99.20% vote shares in e-voting, which completed on 24.02.2022.
Letter of Intent (LoI) was issued to the Appellant on 01.03.2020. Out of total plan value of Rs.173.20 Crores, Appellant deposited the amount of Rs.20.43 Crores which include Security Deposit and the EMD.
I.A. No. 237/2022 was filed by the Interim Resolution Professional (IRP) for approval of the Resolution Plan of the Appellant on 12.03.2022.
The RP has filed various Applications before the Adjudicating Authority seeking possession of Tea Gardens, which were mentioned in the Information Memorandum.
Application filed by RP for taking possession of Tea Gardens were rejected by Adjudicating Authority by different Orders dated 28.05.2021, 21.04.2022, 09.05.2022 and 18.07.2022. The RP aggrieved by the Orders passed by the Adjudicating Authority rejecting the Application for taking possession of the Tea Gardens filed Comp. App. (AT) (Ins.) Nos. 593/2022, 628/2022, 754/2022, 672/2021 & 907/2022.
This Tribunal vide its Judgment and Order dated 02.08.2024 decided all the Appeals and held that leasehold rights of the Corporate Debtor subsists only in 3 Tea Gardens and with regard to other Tea Gardens, the tenure of the lease having been expired, Corporate Debtor has no rights in the said Tea Gardens.
Against the Order dated 02.08.2024 passed by this Tribunal, Civil Appeals have been filed in the Hon’ble Supreme Court. One of the Appeals filed by the Appellant in the Hon’ble Supreme Court is Civil Appeal No. 13077-13081/2024, in which Notices have been issued but Hon’ble Supreme Court has not passed any interim Order.
After the Judgment of this Tribunal dated 02.08.2024, Application for approval of the Resolution Plan filed by the RP was heard and decided by the Impugned Order dated 18.10.2024. As per the Judgment of this Tribunal dated 02.08.2024, the Adjudicating Authority while approving the Resolution Plan has directed that the Resolution Plan is approved subject to compliance and directions in Para 17 and Para 18 of the Impugned Order. Appellant aggrieved by the Order approving the Resolution Plan submitted by the Appellant has come up in the Appeal.
Learned Counsel for the Appellant submits that in view of the fact that Appeals have already filed in the Hon’ble Supreme Court against the Order dated 02.08.2024 passed by this Tribunal in Comp. App. (AT) (Ins.) No. 593/2022 and other Appeals, there being no certainty about the Assets of the Corporate Debtor, the Appellant is in very precarious position and Adjudicating Authority has approved the Resolution Plan subject to the Order dated 02.08.2024 passed by this Tribunal. It is submitted that Appellant’s Intervention Application was also rejected by this Tribunal in its Judgment dated 02.08.2024. Appellant has already filed Civil Appeal No. 13077-13081/2024 before the Hon’ble Supreme Court challenging the Order dated 02.08.2024, which is pending. The core issue regarding the Assets that constituted Corporate Debtor’s portfolio is pending consideration before the Hon’ble Supreme Court. Appellant in the Hon’ble Supreme Court has challenged the exclusion of 9 Tea Estates from the Assets of the Corporate Debtor and the State of West Bengal have separately filed Appeal challenging the inclusion of 3 Tea Estates in the Assets of the Corporate Debtor. Hon’ble Supreme Court on 22.11.2024 has issued notices. There are other Company Appeals filed against the Impugned Order by M/s. Marico Agro Industries Private Limited, the State of West Bengal and Nagari Farms Tea Company Limited. It is submitted that above situation called for intervention of this Tribunal. It is submitted that there were certain inadvertent errors in the Order of the Adjudicating Authority which required correction however Adjudicating Authority refused to rectify the errors, citing the pendency of the Appeal. Adjudicating Authority has made the approval of the Resolution Plan uncertain and precarious. Even the Tea Estates which have been allowed by the Adjudicating Authority are in the possession of third-parties. Learned Counsel for the Appellant submits that implementation of the Impugned Order be kept in abeyance until the adjudication of Civil Appeal No. 13077-13081/2024 pending before Hon’ble Supreme Court.
Learned Counsel for the RP refuting the submission of the Counsel for the Appellant contents that Information Memorandum which was published by the RP clearly reflected the status of all 12 Gardens. Information Memorandum itself mentioned that leases of only three Tea Gardens are current and leases of 9 Tea Gardens have come to an end. The Appellant has given his Resolution Plan, relying on the Information Memorandum. Appellant was well aware that Application for RP in taking possession of few of the Tea Gardens was already rejected on 28.05.2021. Appellant having submitted his Plan being well aware of the status of the Tea Gardens, it is not open to Appellant to raise any grievance regarding the approval of the Resolution Plan, which Plan was submitted by the Appellant itself. It is submitted that approval of the Resolution Plan relying on the Judgment of this Tribunal dated 02.08.2024 is in accordance with law when this Tribunal in Appeal filed by RP regarding the rights of the Corporate Debtor on the different Tea Gardens have finally pronounced on 02.08.2024 that only three leases of Tea Gardens are current and possession of which can be taken by the Corporate Debtor and leases of 9 Tea Gardens having expired, the Corporate Debtor has no right on the said Tea Gardens. Approval of the Resolution Plan, which is in accordance with the Judgment dated 02.08.2024 cannot be faulted. It is submitted that Appellant has given unconditional undertaking to implement the Resolution Plan. It is submitted that although against the Judgment dated 02.08.2024, Appellant has filed an Appeal, but no interim Order has passed in favour of the Appellant.
We have considered the submissions of the Counsel for the Parties and perused the record.
The Resolution Plan submitted by the Appellant was on the basis of Information Memorandum, which Information Memorandum clearly mentioned the status of all the 12 Tea Gardens. As noted above, RP after commencement of the CIRP has filed Applications before the Adjudicating Authority for taking possession of various Tea Gardens, which Applications were rejected by Adjudicating Authority, challenging which Orders, Company Appeals were filed by RP in this Tribunal. This Appellate Tribunal after hearing the RP has delivered the Judgment on 02.08.2024, deciding all the Appeals arising from various Orders passed by the Adjudicating Authority rejecting the Application of RP. This Tribunal after hearing the Parties including the State of West Bengal has held that leases of 3 Tea Gardens, namely Garganda, Kilcott and Bagracote have been renewed and valid. In Paragraphs 120 and 121 of the Judgment of this Tribunal following was held:
“120.In view of the foregoing discussions and conclusions, we held that leasehold rights of the Corporate Debtor subsist in three Tea Gardens, namely - Garganda, Kilcott and Bagracote, where the lease has been renewed and valid as follows:
Sl. No. Tea Estate Valid upto 1. Garganda 08.09.2026 2. Kilcott 23.08.2025 3. Bagarcote Div. I 22.05.2028 121.The orders rejecting the IAs of RP insofar as the aforesaid three Tea Gardens are concerned are unsustainable and deserve to be set aside. In view of the above, all the Appeal(s) are disposed of in following manner:
I. Company Appeal (AT) (Insolvency) No. 672 of 2021 is partly allowed. The order dated 28.05.2021 passed in IA No.1256/KB/2020 is partly allowed, insofar as Garganda Tea Garden is concerned. The order of the Adjudicating Authority with respect to other Tea Gardens, i.e., Hantapara, Tulsipara and Dumchipara is affirmed.
II. Company Appeal (AT) (Insolvency) No.593 of 2022 is partly allowed. Order dated 21.04.2022 in IA No.1111/KB/2021 set aside, insofar it relates to Tea Garden Kilcott. Rest of the order is affirmed.
III. Company Appeal (AT) (Insolvency) No.754 of 2022 is partly allowed. Order dated 09.05.2022 passed in IA No.665/KB/2021, insofar as it relates to Bagracote Div.I is set aside. Rest of the order is affirmed.
IV. Company Appeal (AT) (Insolvency) No.628 of 2022 and Company Appeal (AT) (Insolvency) No.907 of 2022 are dismissed.
V. It is held that Tea Gardens of Garganda, Kilcott and Bagracote are assets of the Corporate Debtor, to which the RP was entitled to be handed over the possession. However, in sequence of the events and facts that these three Tea Gardens having been run by Merico and Sammelan and in the Tea Gardens, thousands of workers are working, we are of the view that ends of justice will be served in holding that RP shall be deemed to be in possession of the aforesaid Tea Gardens and operation of these three Tea Gardens shall henceforth be under the supervision and control of the RP till the CIRP continues.”
When the Plan approval Application came for consideration, Order of this Tribunal dated 02.08.2024 was already before the Adjudicating Authority. Adjudicating Authority while approving the Resolution Plan has relied on Paragraphs 120 and 121 of this Tribunal’s Order as quoted above and Paragraphs 17 and 18 of the Impugned Order, Adjudicating Authority has directed as follows:
“17.The said order, thus confirms that Leasehold rights of Corporate Debtor are subsisting in three Tea Gardens only namely Garganda, Kilcott and Bagarcote Div. I, where the Lease has been renewed and are valid as follows:
Sl. No. Tea Estate Valid upto 1. Garganda 08.09.2026 2. Kilcott 23.08.2025 3. Bagarcote Div. I 22.05.2028 18.Therefore, we make it clear that a part from these three Tea Gardens, Two Tea Gardens whose freehold ownership has not been disputed namely Terai Land and Madarihat, the SRA will not be automatically be entitled to claim those as assets of Corporate Debtor. In regard to the rest of the Tea Gardens, for which lease period has expired or the Tea Gardens are in possession with others, SRA is free to take steps for renewal of the Leases and get the possession of the same, if granted. This is as per orders are passed by Hon'ble NCLAT dated 02.08.2024.”
The Resolution Plan has been approved. Paragraphs 41 and 42 of the Impugned Order is as follows:
“41.Subject to the compliance of decisions of Hon'ble NCLAT Principal Bench, New Delhi passed on 02.08.2024, in the matter of Company Appeal (AT) (INS) No. 593 of 2022 & IA No. 3172 of 2022 (Ram Ratan Modi, Resolution Professional of Duncans Industries Limited Versus Sammelan Tea and Beverages Pvt. Ltd. & Ors.) made in the said Order and compliance of directions in Para 17 & Para 24 (supra), the Resolution Plan in question is hereby APPROVED by this Bench. The Resolution Plan shall form part of this Order.
42.The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect.”
The Appellant who is the SRA has also filed an Application in the Company Appeals, which were decided by this Tribunal on 02.08.2024 for impleadment. With regard to approval of Resolution Plan, this Tribunal has noticed the Application filed by the Appellant. In Paragraph 118 of the Judgment dated 02.08.2024, following was observed:
“118.Another IA No.1888/2023 filed by Uniglobal Papers Private Limited in Company Appeal (AT) (Insolvency) No.593 of 2022, which claims to be Resolution Applicant, whose Resolution Plan in the CIRP of the Corporate Debtor has been approved by the Committee of Creditors. The Applicant submits that it has submitted the Resolution Plan in consortium with Trade Sea International Pvt. Ltd., which was placed for e-voting and the Plan of the Applicant was approved with 99.20% vote share and the Applicant has been declared Successful Resolution Applicant.”
In the Order dated 02.08.2024, this Tribunal was concerned only with the rejection of the Application filed by the RP, where possession was sought to be taken for different Tea Gardens, hence this Tribunal observed that question of approving Resolution Plan was not subject matter of the Appeal. This Tribunal also noted the Resolution Plan has already been approved with 99.20% vote share of the CoC.
Coming to the submission of the Counsel for the Appellant that Appellant has already filed an Appeal against the Order passed by this Tribunal before the Hon’ble Supreme Court being Civil Appeal No.13077-13081/2024. Hon’ble Supreme Court in the Civil Appeal filed by the Appellant has passed an Order dated 22.11.2024, which has been brought on record as Annexure A-5. Hon’ble Supreme Court has issued Notice in the Appeal and Appeal is pending consideration before the Hon’ble Supreme Court.
Appellant itself had filed the Resolution Plan which was approved by the CoC and thereafter by the Adjudicating Authority by the Impugned Order. Approval of the Resolution Plan has to be in accordance with the Judgment of this Tribunal dated 02.08.2024, which has pronounced on the Assets of the Corporate Debtor which can be treated to be Assets of the Corporate Debtor for resolution of insolvency. There is no argument raised by the Appellant that approval of the Resolution Plan which has been approved by the CoC is non-compliant of Section 30(2) of the IBC. The law is well settled that Adjudicating Authority/Appellate Tribunal has very limited jurisdiction to interfere with the approval of the Resolution Plan. In this context, we refer to the Judgment of the Hon’ble Supreme Court in the matter of `K. Sashidhar’ Vs. `Indian Overseas Bank & Ors.’ reported in (2019) 12 SCC 150, Paragraphs 52 and 59:
“52.As aforesaid, upon receipt of a “rejected” resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I&B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of the Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They 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. The legislature, consciously, has not provided any ground to challenge the “commercial wisdom” of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable.
59.In our view, neither the adjudicating authority (NCLT) nor the appellate authority (Nclat) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors. The fact that substantial or majority per cent of financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is by a vote of not less than 75% (after amendment of 2018 w.e.f. 6-6-2018, 66%) of voting share of the financial creditors. To put it differently, the action of liquidation process postulated in Chapter III of the I&B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October 2017) of voting share of the financial creditors. Conversely, the legislative intent is to uphold the opinion or hypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified per cent (25% in October 2017; and now after the amendment w.e.f. 6-6-2018, 44%). The inevitable outcome of voting by not less than requisite per cent of voting share of financial creditors to disapprove the proposed resolution plan, de jure, entails in its deemed rejection.”
We do not find any infirmity in the Order of the Adjudicating Authority approving the Resolution Plan. Learned Counsel for the Appellant has also submitted that implementation of the Resolution Plan be stayed till the Civil Appeals filed by the Appellant being Civil Appeal No.13077-13081/2024, are decided. The aforesaid Civil Appeals have been filed against the Order dated 02.08.2024 passed by the Tribunal pronouncing on the Assets which can be said to be Assets of the Corporate Debtor. The Order impugned is an Order approving the Resolution Plan. Adjudicating Authority has rightly approved the Resolution Plan in accordance with the Judgment of this Tribunal dated 02.08.2024. We do not find any good ground to direct that implementation of the Resolution Plan be kept in abeyance as prayed by the Appellant.
We, thus do not find any error in the Impugned Order passed by the Adjudicating Authority approving the Resolution Plan.
Appeal is dismissed.