M. K. RAJAGOPALAN v. DR. PERIASAMY PALANI GOUNDER & ANR.

A as a director in any company for a period of five years from the date on which the said International Aviation Academy Private Limited failed to repay the deposit amount. Some of the relevant observations and the findings of the Appellate Tribunal in this regard could be noticed in the following extraction: - B “117. The learned Senior Counsel for the 2nd respondent has vehemently argued that the objection raised by the appellant was never raised before the Adjudicating Authority. In response to this objection, Learned Counsel for the appellant submits no estoppel against a statute. Section 61 (3) empowers the Appellate Tribunal to question irregularities and illegalities in the CIRP, C including the Resolution Plan. The Resolution Plan being in rem, these questions fall within the exclusive purview of judicial review. These grounds cannot be eschewed from consideration on the simple ground that they were never raised before NCLT, as persons who were not before NCLT are also before this court.

D 118. The Ld Senior counsel for the Appellants, in response to the above submissions of Respondent No.2, regarding the disqualification of the 2nd Respondent, argued that the 2nd Respondent is a Director of M/s. International Aviation Academy Private Limited, and it is seen from the audited financial statements E of the said Company for the period 2010-2011 to 2017-2018 that a sum of Rs.12,03,000/- has been collected as ‘share application money pending allotment’.

119. It appears that the said sum has not been refunded, and as such, the same shall be treated as ‘deposit’ in terms of Explanation F (a) of Rule 2(1)(c)(vii) of The Companies (Acceptance of Deposits) Rules, 2014. In the above circumstances, given Section 164 (2) (b) of the Companies Act, the 2nd Respondent has been disqualified from acting as a Director in any Company for five years from the date on which the said Ms International Aviation Academy Private Limited failed to repay the deposit amounts G collected towards ‘share application money pending allotment’ aggregating to Rs.12,03,000/.

120. Even assuming these amounts have been repaid during 2018- 2019, the 2nd Respondent is disqualified from acting as a director to date. Thus, the 2nd Respondent is not eligible to act as a H

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resolution applicant as per Section 29-A(e) of the Code. The A audited balance sheets of the said M/s. International Aviation Academy Private Limited for the years from 2011 to 2018.

121. The 2nd Respondent has suppressed the above facts and has submitted the Resolution Plan by giving a false declaration that he does not suffer from any disqualification. Now, the 2nd B Respondent has claimed that Rs.12,03,000/- was paid by himself to the said M/s. International Aviation Academy Private Limited and that him being a member/ Director of the said Company, such payment would not amount to ‘deposit’ as per Rule 2(1)(c)(viii) of The Companies (Acceptance of Deposits) Rules, 2014 and General Circular No. 5 dated 30.³.2015, issued by the Ministry C of Corporate Affairs.

122. The 2nd Respondent has chosen not to file any document to support the above contention and has failed to discharge his burden under Section 106 of the Indian Evidence Act, 1872. D

123. Suppose it is considered that the sum of Rs.12,03,000/- was paid by the 2nd Respondent to the said M/s. International Aviation Academy Private Limited, the Application of Rule 2(1)(c)(viii) of The Companies (Acceptance of Deposits) Rules, 2014 is subject to the conditions stipulated therein, which have not been complied with. Therefore, it is misleading to state that Private Limited E Companies have been granted a specific exemption.

124. Further, even as per the General Circular No.5 dated 30.³.2015, any renewal of deposit after 01.04.2014 shall be in accordance with the Companies Act, 2013 and the rules made thereunder. It is thus patent that the said sum of Rs.12,03,000/- is F a deposit, and as such, the 2nd Respondent is disqualified from acting as a Director given Section 164(2)(b) of the Companies Act, 2013.

125. It is correct to say that the IRP/RP should be concerned as to whether a Resolution Application submitting his EOI is eligible G as per the provisions of Section 29-A of the Code. Apparently, in the case on hand, the 1st Respondent has not properly verified the eligibility of the 2nd Respondent and has acted solely based upon the false declarations given by the 2nd Respondent. H

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A 126. However, the Appellant is well within his rights to question the legality of the CIRP and the Resolution Plan.

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132. It is pertinent to mention that after Approval of the A Resolution Plan by COC entire exercise for revising the Resolution Plan for making a complaint with Section 30 (2) of the Code was left with the Resolution Applicant. Revised Resolution Plan dated 25 January 2021, without further approval of CoC, was presented by RP before the B Adjudicating Authority for approval, which was finally approved by the impugned Order.

133. It is also important to mention that the learned Adjudicating Authority/National Company Law Tribunal has stated in the impugned order that “it is seen that the final resolution plan was put up for consideration by the COC in the 9th meeting C held on 22 January 2021 and the said resolution was approved with a thumping majority of 87.39%.”

134. The Adjudicating Authority failed to notice that the Resolution Plan was not approved in the 9th COC meeting. Therefore, based on the resolution of the 9th COC meeting, the Resolution Plan D was to be sent back to the Resolution Applicant for further revision. After that, the final Revised Resolution Plan was made on 25 January 2021, but it was never presented before the COC for approval.

135. After “revision”, the revised plan is never put to the vote. E Instead, it is filed to NCLT directly, without any approval from the COC on the revised Resolution Plan. Sections 30(2), 30(4), 30(6) and Section 31 mandate that only a plan as approved by the ‘COC’ can be presented to the NCLT for its approval under Section 31. Such kind of procedural failure amounts to material irregularity F and goes to the root of the matter, making the plan void and non- est in law, as it is trite law that where the law permits a thing to be done in a particular manner if the same is not done in that manner, the same is non-est in the eyes of the law.” 19.6. As regards the issue of non-consideration of Section 12-A G IBC application of the promoter of the corporate debtor, the Appellate Tribunal observed that the consideration of settlement offer was essential and that the settlement offer could not have been rejected without consideration by the CoC. It was further held that CoC, in its commercial wisdom, had full liberty to either accept or reject the settlement offer H

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A but, consideration of the settlement offer was indispensable. In regard to this aspect, the Appellate Tribunal observed and held as under: - “140. Based on the pleadings of the parties, it is clear that the COC meeting was not called for consideration of the 12 A application. Since ‘Form FA’ has to be submitted only by the B Applicant Financial Creditor after the proposal floated by the promoters is considered, and only after the proposal has been accepted by 90% of the Committee of Creditors, the Applicant Financial Creditor has to file the proposal as per Form FA. Thus, it is clear that the Resolution Professional cannot disregard the proposal for conducting a meeting of the CoC on such an untenable and superficial ground.

141. It appears that based on the settlement offer, the appellant sent a letter to the Financial Creditor Tourism Finance Corporation of India that an investor has expressed its willingness to infuse funds of 350 crores to settle the secured Financial Creditors in full within 30 days. This amount will be deposited in the current account. Regarding the claims made by other Unsecured Financial Creditors, Operational Creditors, implies, and other stakeholders, it will be settled after discussion with them and out of the generation of funds from the company’s operation. In the circumstances, the appellant requested to accept the settlement so that the 12 A application may be submitted before the NCLT. The term sheet of the Deutsche Bank was also annexed with the settlement offer.

142. It is also necessary to mention that when the appeal was filed, then on the 1st date of admission of the Appeal, i.e. 30 July F 2021, the learned counsel for the appellant made a statement in the court that the appellant would deposit ¹ 450 crores. Therefore, he requires 2 or 3 days. Since the total Resolution Plans amount was 423 crores, the Appellant contended that assets of the corporate debtor are worth over rupees for 1600 crores. It is also contended that the 12 A application was pending, but it was not considered and voted. Considering all the situations and bona fides of the appellant, this Appellate Tribunal granted an interim stay on implementing the impugned order.

143. Based on the pleadings of the parties, it appears that a settlement offer was made, and a 12 A application was to be submitted after getting the consent of 90% members of the COC.

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In the circumstances, the appellant requested to consider the A settlement proposal in the COC. However, COC was never called to consider the settlement offer. The Resolution Professional has contended that the COC has rejected the settlement offer in its 9th meeting. This statement is also not as per the minutes of the 9th COC meeting. It appears from the minutes of the 9th COC B that only a Resolution Plan was discussed in that meeting. After that, the Resolution Plan was sent back to the resolution applicant by CoC for reconsideration and revision. In the 9 COC meetings, no discussion about the settlement offer occurred. It is essential to mention that after admission of the petition and formation of the Committee of Creditors, Section 12A application for withdrawal could only be accepted if the CoC approves the proposal with a 90% vote share. It is undisputed that COC, under its commercial wisdom, had full liberty to either accept or reject the settlement offer. But consideration of the settlement offer is essential. At this juncture, this tribunal “Worth recalls and recollects” the judgement of Hon’ble 3 Member Bench of this Tribunal in Company Appeal (AT) (Ins) No.91 of 2019 dated 6 September 2019 between Shaji Purusothaman v Union Bank of India and others (reported in MANU/NL/0438/2019) whereby and whereunder at paragraph 9 it is observed that; “if an application u/s 12 A is filed by the Appellant, the E Committee of Creditors may decide as to whether the proposal given by the appellant for settlement in terms of Section 12 A is better than the resolution plan as approved by it, and may pass appropriate order. However, as such decision is required to be taken by the “Committee of Creditors”, we are not expressing any opinion on the same.”

144. In this case, CoC never considered the settlement proposal submitted by the Appellant. Although, after getting the settlement proposal, it was incumbent upon the resolution professional to call the COC meeting to consider the settlement proposal. It is essential to mention that the settlement offer could not have been rejected without consideration by the COC.” 19.7. As regards the question of discrimination between the claims of related party and unrelated party, the Appellate Tribunal, while placing reliance on the decision of this Court in Phoenix ARC (P) Ltd v. Spade H

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150. The underlying object is that the involvement of a related party in the CIRP in any capacity is seen as giving unfair benefit to the Corporate Debtor. In short, a related party is treated in the same class as the Corporate Debtor itself.

151. Therefore, this statutory recognition as a different class would apply even to a Resolution Plan when the CoC decides whether, in its commercial wisdom, it should pay to a related party at all as this would mean paying to the same persons who are behind the Corporate Debtor. *** *** ***

157. Thus, it is well-settled that a ‘related party’ can be treated as C a separate class independent of an unrelated party. Such ‘related party’ ought to be equated with the promoters as ‘equity shareholders as partners. *** *** *** D

162. In the instant case of approved resolution plan discriminates between related party unsecured Financial Creditor and other unsecured Financial Creditors, likewise related party operational creditors and other operational creditors. The appellant argues that its claim ought to be treated equally to an unrelated Operational/ Financial Creditor given the equality clause enshrined under Article E 14 of the Constitution of India. *** *** ***

171. It is important to mention that related parties are barred from participating in the COC to avoid sabotaging the COC. Per contra, F the claim filed by the related party, based on their admitted claims, would have influenced the CIRP if they had been permitted to participate in the COC. After completion of the CIRP and after approval of the Resolution Plan, if any amount is allotted to related party financial or operational creditors, it would not impact the CIRP. G

172. It is also necessary to point out that code is a self-contained code. Therefore, any provision that restricts related-party Financial Or Operational Creditor actions is stated in the code. Thus, the Adjudicating Authority / NCLT/NCLAT cannot further limit the rights of Related Party Financial or Operational Creditors by way H

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A of interpretation. Furthermore, restrictions on the related party rights under CIRP under Code and Regulation are provided at different places. Therefore, its scope cannot be exceeded further by way of interpretation.

173. Thus, it is clear that IBC treats related parties as a B separate category for specified purposes, excluding from the CoC under Section 21 and disqualifying them from being Resolution Applicants under section 29A. However, the IBC does not treat Related Party as a separate class for any other purpose. Therefore, a rationale nexus must exist for any classification between the object sought to achieve the classification and sub-classification. Therefore, the Related Party financial or operational creditor cannot be discriminated against under the Resolution Plan, denying their right to get payments under the Resolution Plan only on being a Related Party. It is also made clear that by getting only payment under the Resolution Plan, related party creditors could in no way sabotage the CIRP.” 19.8. The Appellate Tribunal, while concluding on its findings and reiterating its observations on several issues including those noticed above, held that increase in RP’s fees with retrospective effect was not a prudent decision of CoC; the possibility of an impact on the decision of RP for submission of the resolution plan before the Adjudicating Authority without approval of CoC cannot be ruled out. The Appellate Tribunal disapproved the order passed by the Adjudicating Authority for the reasons: (a) existence of a valid and accurate valuation report was a sine qua non for the CoC to exercise its commercial wisdom and observation of the F Adjudicating Authority that Regulation 35 of the CIRP Regulations contemplates sharing of only fair value and liquidation value figures on obtaining confidentiality undertaking from the members of the CoC was incorrect; (b) the compliance with statutory requirements in regulating a matter of practice and procedure was mandatory and observation of G Adjudicating Authority that a statutory provision regulating a matter of practice or procedure would generally be regarded as directory and not mandatory was erroneous; (c) non-publication of notices of Form G, inviting EOI, was a material irregularity in exercise of the powers by resolution professional; (d) the resolution applicant was ineligible to submit the resolution plan; (e) the revised resolution plan was filed before the H

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Adjudicating Authority without laying it before the CoC for approval A violating Sections 30(2) and 30(3) of the Code and thereby, vitiating the entire CIRP and rendering the resolution plan as void ab initio-; and (f) the related party financial or operational creditor could not have been discriminated by denying their right to get payments under the resolution plan only on being a related party. B 19.9. The Appellate Tribunal recorded its conclusions in the following terms: - “CONCLUSION

174. The increase in RP fees with retrospective effect can not be considered as CoC’s prudent decision. The possibility of an impact on the decision of RP for the submission of the Resolution Plan before the Adjudicating Authority for approval, even without the approval of CoC, cannot be ruled out. Submission of the Resolution Plan for Approval before the Adjudicating Authority violates the statutory provision of Section 30(2) &(3) of the Code and has vitiated the entire CIRP and made the Resolution Plan Void ab initio.

175. Further, Adjudicating Authority observation that Regulation 35 of the IBBI (IRPCP) Regulations 2016 contemplates sharing of only fair value and liquidation value figures on obtaining confidentiality undertaking from the members of the CoC is incorrect. Finding that Since the Promoter is not a member of the CoC, the values were shared with the Promoter and that there are no requirements under the law for the RP to share the valuation report is also erroneous. F

176. A valuation consisting of mere naked values without a detailed report is not valid. It is a settled proposition that the Valuation exercise is conducted to facilitate the CoC’s decision-making process. Therefore, the existence of a valid and accurate valuation report is a sine qua non for the COC to exercise its commercial wisdom. A natural sequitur to those above would be that a detailed G valuation report is necessary for the CoC to exercise its commercial wisdom objectively.

177. The Adjudicating Authority’s observation that a statutory provision regulating a matter of practice or procedure will H

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A generally be read as a directory and not mandatory is erroneous. Compliance with statutory requirements in regulating a matter of practice and procedure are mandatory. The Tribunal is a creature of statute, and by interpretation, it cannot dilute the statutory compliances.

B 178. Further, observation of the Adjudicating Authority that procedural irregularities in relation to the conduct of the proceedings in relation to the CoC will not be material when the objectors failed to establish prejudice caused to them in respect of the same is also erroneous.

C 179. Regulation 36(2) of CIRP Regulations provides the mandatory condition for publication of ‘Form-G’ on the Corporate Debtor’s website and the website designated by the Board for the purpose. Non-publication of notices of Form G is a material irregularity in exercise of the powers by Resolution Professional during the Corporate Insolvency Resolution period. In the instant case, there D has been a material irregularity in exercising the powers by Resolution Professional during the Corporate Insolvency Resolution Process.

180. Since the said Trust (Prospective Resolution Applicant) ‘Sri Balaji Vidyapeeth’ has already been declared as ineligible, the E 2nd Respondent (SRA) cannot be permitted to act as its alter ego in implementing the Resolution Plan and attain any financial advantage or gain, which is barred by Section 88 of the Indian Trusts Act.

182. However, the IBC does not treat Related Party as a separate class for any other purpose. Therefore, a rationale nexus must exist for any classification between the object sought to achieve H

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the classification and sub-classification. Therefore, Related Party A Financial or Operational Creditor cannot be discriminated under the Resolution Plan only on being a Related Party.

183. Based on the discussion above, it is clear that IBC treats related parties as a separate category for specified purposes, excluding from the CoC under Section 21 and disqualifying them B from being Resolution Applicants under Section 29A. However, the IBC does not treat Related Party as a separate class for any other purpose. Therefore, a rationale nexus must exist for any classification between the object sought to achieve the classification and sub-classification. C

184. Therefore, the Related Party financial or operational creditor cannot be discriminated against under the Resolution Plan, denying their right to get payments under the resolution Plan only on being a Related Party. It is also made clear that by getting only payment under the Resolution Plan, related party creditors could in no way sabotage the CIRP. D

185. Based on the above discussion, it is clear that the approved Resolution Plan is in contravention of Section 30 (2) of the Insolvency and Bankruptcy Code 2016, which contravenes the provision of law.” E

20Copy pinpoint20. Hence, the Appellate Authority set aside the resolution plan approved by the Adjudicating Authority; directed the resolution professional to proceed with the CIRP from publication stage of Form G for inviting EOI afresh as per the CIRP Regulations and further to put up the settlement proposal of the promoter for consideration before CoC; and ordained that the claim of related party financial/operational creditor F be not discriminated from unrelated financial/operational creditors. Proceedings in this Court

21Copy pinpoint21. Aggrieved of the aforesaid judgment and order dated 17.02.2022 passed by the Appellate Authority, eight appeals are filed before this G Court. As noticed, one sub-set is of four appeals as filed by the resolution applicant and other sub-set is of four appeals as filed by the resolution professional against the promoter and erstwhile director of the corporate debtor, related financial and operational creditor and against the NRI shareholder and erstwhile director of the corporate debtor. The details H

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A whereof have been noticed hereinbefore in the particulars of proceedings and parties.

22Copy pinpoint22. It would be worthwhile to mention a few relevant aspects from the record of proceedings in this Court. 22.1. On 07.³.2022, civil appeals bearing numbers 1682-1683 of B 2022, 1759 of 2022, 1756 of 2022, 1757 of 2022, 1807 of 2022 were called for hearing by this Court. During the hearing, counsel for the resolution applicant and counsel for contesting parties were heard but the arguments of counsel for the resolution professional remained inconclusive and the matter was posted to 11.³.2022 for further hearing. C It was further pointed out during the submissions that the resolution applicant has filed two other civil appeals, bearing numbers 1810 of 2022 and 1827 of 2022, respectively against Dr. V. Janakiraman and Dharani Finance Limited. The said appeals were ordered to be listed along with this batch of matters on 11.³.2022. Further, learned counsel for the resolution professional also placed before this Court the minutes of D eleventh CoC meeting held on 03.³.2022 which were ordered to be filed in the registry with appropriate affidavit. Later on, RP filed the minutes of the eleventh CoC meeting as also the tenth CoC meeting and other documents with affidavit. The details of these and other subsequent meetings of CoC are set out in the next segment of this judgment. E 22.2. On 16.³.2022, after having heard learned counsel for the respective parties along with rejoinder submissions at length, the judgment was reserved and learned counsel for the parties were granted time to file their note/additional notes on their submissions by 22.³.2022. It was further noted, during the course of submissions, that pursuant to the F impugned order dated 17.02.2022 of the Appellate Authority, CoC meeting had taken place on 03.³.2022 and that another meeting was slated for 21.³.2022. As regards this submission, in the totality of circumstances, this Court deemed it appropriate to allow the meetings/proceedings of the CoC to continue, subject to the final orders to be passed in these appeals. G

23Copy pinpoint23. However, learned counsel for the resolution applicant filed an application for appropriate directions in this matter on 14.05.2022, seeking ad interim direction of staying the CIRP as initiated by the resolution professional by publishing Form G on 26.04.2022 pursuant to directions of the NCLAT in its judgment dated 17.02.2022; or to stay the operation H of impugned judgment dated 17.02.2022 as regards disqualification of

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the resolution applicant and to direct the resolution professional to consider his EOI in the fresh CIRP as initiated. 23.1. The aforesaid application was taken on board by this Court on 20.05.2022. Having taken note of the averments of the application and having regard to the order as passed on 16.³.2022, making all the proceedings subject to final outcome of these appeals, this Court did not consider it necessary or expedient at that stage to pass any further order or direction as regards the averment therein.

24Copy pinpoint24. On 07.11.2022, Dr. Periasamy Palani Gounder - the promoter and erstwhile director of the corporate debtor, filed an application bearing IA No. 168602 of 2022 in Civil Appeal Nos. 1682 of 2022, seeking permission to bring on record subsequent facts and documents that, during the pendency of these appeals, his proposal of settlement under Section 12-A of the Code was accepted by CoC on 12.10.2022 by 100 per cent. majority which had been placed before the Adjudicating Authority for approval. D 24.1. In reply to the aforesaid application, it was submitted on behalf of the resolution applicant that the very consideration of Section 12-A application of the promoter by CoC was against the explicit direction of the Appellate Authority in its judgment dated 17.02.2022, which allowed only 15 days for the CoC to examine the pending or existing Section 12- A proposal of the promoter which was rejected by the CoC on 25.³.2022 E and therefore, the only recourse after such a rejection available with CoC was to continue with the fresh CIRP and it had no legal authority to consider or vote on a new application after issuance of fresh Form G. 24.2. In the wake of the applications so moved, the matter was again taken on board by this Court on 17.11.2022 and after having heard F learned counsel for the respective parties this Court requested the Adjudicating Authority to await the decision in these appeals while granting permission to learned counsel for the respective parties to file further submissions in relation to the said application by 21.11.2022. The events during pendency of these appeals. G

25Copy pinpoint25. To piece together a timeline, it would be worthwhile to take note of the subsequent events that took place pursuant to the orders and directions as passed by the Appellate Authority in the order impugned dated 17.02.2022 directing the resolution professional to proceed with the CIRP from stage of publication of Form G inviting fresh EOI and for H

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A consideration of settlement proposal of the promoter under Section 12- A IBC.

26Copy pinpoint26. In compliance of the impugned order dated 17.02.2022 as passed by NCLAT, eleventh CoC meeting was held on 03.³.2022; and the resolution professional put the settlement proposal of the promoter to vote in the CoC, where the voting continued until 25.³.2022. Ultimately, the said settlement proposal was voted against by 51.81% of voting share in CoC. 26.1. In the twelfth CoC meeting held on 18.04.2022, the eligibility criteria and evaluation matrix for issuance of EOI was put to vote post discussion at this meeting and was approved with 92.52% of total voting power of CoC members. 26.2. In the thirteenth CoC meeting held on 23.05.2022, resolution professional informed the members of CoC that EOI was published on 26.04.2022 with last date of submission fixed as 15.05.2022 and 7 EOIs D had been received. As regards the extension of time to submit EOI, the CoC resolved that the last date of submission of EOI be extended to 09.06.2022 with 93.46% of the total voting powers of CoC. It was further resolved that nothing in the Request for Resolution Plan (RFRP) be changed and the performance bank guarantee (PBG) amount as decided earlier by CoC of Rs. 25 crore shall stand approved and shall remain E unchanged. 26.³. In the fourteenth CoC meeting held on 27.05.2022, it was resolved by CoC that RP shall immediately seek extension of CIRP timelines further by 90 days with effect from 13.05.2022 under Section 12(2) IBC application to be filed with the Adjudicating Authority. Further, F in relation to extension of time for submission of resolution plan, the CoC in its fifteenth meeting held on 19.07.2022, resolved with 92.70% voice vote to extend the timeline to 01.08.2022. As regards further extension of time, in the sixteenth CoC meeting held on 10.08.2022, the CoC members with total voting power of 79.29%, resolved for RP to file an G application for further extension/exclusion of time before the Adjudicating Authority for continuing with CIRP . 26.4. In the seventeenth CoC meeting held on 26.08.2022, discussing about the compliance of resolution plans as submitted by the prospective resolution applicants, a query was raised by one of the members of CoC that despite being declared disqualified and ineligible H

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by NCLAT, as to why the resolution plan of Mr. M.K. Rajagopalan – A resolution applicant herein – was even being considered. To this, the Chairperson responded that in the order dated 16.³.2022 this Court while reserving the judgment clearly stated that all the meetings/ proceedings of CoC shall continue subject to the final orders to be passed by the Court and this information was clearly laid down with disclaimers in the list of prospective resolution applicants as well as final list of eligible resolution applicants and was known to everyone. He also stated that as regards this, legal advice had been sought and the CoC also gave its consent. 26.5. In the eighteenth CoC meeting held on 29.09.2022, after informing the members of CoC that 7 resolution plans have been received till date and their evaluation was under process, the Chairperson apprised the CoC that a revised settlement proposal has been submitted by the promoter – Dr. Periasamy Palani Gounder – under Section 12-A IBC on 19.09.2022. The members of the CoC debated on the possibilities of consideration of Section 12-A proposal vis-à-vis evaluation and consideration of resolution plans as received. However, noticing that the mandatory 330 days period was about to end on 12.10.2022, the CoC members unanimously voted and agreed for seeking exclusion/extension of CIRP timelines and directed the RP to file suitable application under Section 12(2) IBC before the NCLT. E 26.6. In the nineteenth CoC meeting held on 12.10.2022, the discussion as regards the settlement proposal submitted by the promoter - Dr. Periasamy Palani Gounder - continued and after an extensive discussion, the CoC decided to evaluate the 12-A proposal and put it to vote. Accordingly, the settlement proposal was put to vote and was approved by the CoC with 100% of the total voting powers of members. F The relevant parts of the resolutions adopted in this meeting and the final conclusion post voting, as stated in the minutes of the nineteenth meeting read as under: - “Resolution for Voting by the CoC G “Resolved that the settlement proposal submitted by Mr. Palani G Periasamy (Promoter) under Section 12A of the IBC, 2016 which was placed before the COC for discussion and approval in the nineteenth COC meeting held on 12.10.2022 is hereby approved”. H

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A (The above Resolution is being put to vote from 14/10/2022 12 PM till 21/10/2022 11.59 PM and based on the result of this voting, the post voting minutes will be updated and sent to the CoC.) Result of the Resolution,Post Voting ended on 31/10/2022 at 10 PM B The above Resolution of the Promoter for settlement under Section 12 A of the IBC, 2016, which was put to vote on 14.10/2022 to 31/ 10/2022 is approved with 100% of the Total voting powers of the CoC. The Voting results and the approval sheet from the E-Voting is sent to the CoC separately.” Rival submissions

27Copy pinpoint27. We have heard learned senior counsel Dr. Abhishek M. Singhvi and Mr. C. Aryama Sundaram appearing for the resolution applicant; learned senior counsel Mr. Vijay Narayan appearing for the resolution professional; learned senior counsel, Mr. Mukul Rohatgi, Mr. K.V. Vishwanathan and Mr. Dhruv Mehta as also learned counsel Ms. Haripriya Padmanabhan appearing for the respective contesting parties. We have also heard learned senior counsel Mr. Rakesh Dwivedi appearing for Edelweiss & associates and learned Solicitor General Mr. E Tushar Mehta, appearing for SBI.

28Copy pinpoint28. Learned senior counsel for the resolution applicant, Dr. Abhishek M. Singhvi, appearing in the lead matter has emphatically argued against the impugned order while questioning the findings and observations of the Appellate Tribunal with the following principal F submissions: 28.1. As regards the proposition of settlement put forward by the promoter with reference to Section 12-A of the Code, it has been contended that the entitlement to file for withdrawal of the application admitted under Section 7 of the Code would be restricted to TFCI i.e., G the applicant who had filed the application, with the approval of ninety per cent. voting share of the CoC and such an application for withdrawal could have only been moved through the resolution professional. In the absence of any such move by TFCI, the promoter did not have any right to move an application for withdrawal. H

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28.1.1. It has further been submitted that the letter of settlement A dated 21.01.2021 was submitted without proof of funds and there was no commitment towards funding in the proposal indicated in the Deutsche Bank Indicative Term-Sheet dated 22.01.2021. Even the letter of support for funds dated 14.07.2021 as issued by Saveetha Institute was withdrawn by a subsequent email dated 02.09.2021. Thereafter, in the eleventh B CoC meeting dated 03.³.2022 that took place after the passing of the impugned NCLAT judgment, respondent No. 1 relied upon the settlement proposal, without placing any funds on the table in support thereof. This settlement proposal thus had been nothing but an attempt to delay the CIRP proceedings as rightly observed by NCLT. 28.2. As regards the questions concerning eligibility of the appellant C to act as resolution applicant, it has been submitted by the learned senior counsel that Section 88 of the Trusts Act would not be treated as a ground for disqualification of the appellant under Section 29-A of the Code. Although the trust in question was held to be ineligible at the stage of EOI, the appellant was still held to be eligible in his individual capacity. D Thus, while the trust may be disqualified, the trustee, being a separate entity, cannot be disqualified and the financial capability of the appellant was independent of the trust money. 28.2.1. Learned senior counsel would submit that the appellant could not be held ineligible under Section 29-A(e) of the Code, as the E registrar of companies had not disqualified him under Section 164(2)(b) of the Companies Act for the alleged non-refunded deposit in the other company International Aviation Academy Pvt. Ltd, in which the appellant was a director. Further, the DIN status of the appellant was “active compliant” and NCLAT did not consider its own judgment in C. Raja John v. R. Raghavendran and Ors.: Comp. Appl. (AT)(CH)(Ins) F No. 207 of 2021 wherein it was held that if DIN is activated, Section 29-A(e) of the Code will not be applicable. 28.2.2. This apart, it has also been submitted that since the issue of ineligibility was a mixed question of fact and law, it could not have been raised before NCLAT for the first time, since there is no concept G of deemed disqualification under Section 164(2) of the Companies Act. 28.³. Coming to the question of valuation of assets of the corporate debtor, learned senior counsel has submitted that the resolution plan cannot be set aside on the basis of a contention that the valuation was lower than the liquidation value. Reliance has been placed on the judgment in H

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A Maharashtra Seamless (supra) to submit that the resolution plan would not be required to match the liquidation value. Learned senior counsel would submit that members of CoC were provided with liquidation and fair value; registered valuers were appointed for valuation of core and non-core assets; and these valuers physically visited the properties for that purpose, in compliance of Regulation 35 of the CIRP Regulations. B Thereafter, the CoC approved this valuation in their commercial wisdom, following which NCLT approved it as well, which cannot be second- guessed at a subsequent stage. It has also been submitted that the question as to whether valuer was registered, was not required to be adjudged since it was not in question before IBBI. C 28.4. Learned senior counsel has also submitted that insofar as non-publication of Form-G on the website is concerned, the issue was discussed during the fifth CoC meeting dated 12.11.2020 and the CoC proceeded with the CIRP in its commercial wisdom after a detailed deliberation. Moreover, the earlier judgment of NCLAT dated 05.05.2021 D approving non-publication would act as res judicata. Placing reliance on Kalpraj Dharamshi and Anr. v. Kotak Investment Advisors Limited and Anr.: (2021) 10 SCC 401, it was submitted that non- publication of Form-G on the website cannot be treated as a grave irregularity. E 28.5. As regards the issue of not placing the revised final resolution plan before the CoC, it has been submitted that the appellant had already complied with the requirement of allocating the eligible amount to dissenting financial creditors in the event of liquidation, as per the revised plan and there was no need to seek further approval of the CoC. Moreover, in the tenth meeting, the CoC had granted a ‘deemed post facto approval’ F to the revised plan and had not objected to any of its portions in the affidavit filed before NCLAT dated 09.09.2021. Therefore, it cannot be said that the procedure adopted in the present case amounted to a material irregularity. 28.6. Coming to the application filed by SBI for impleadment, G learned senior counsel would submit that SBI attended all meetings and voted in favour of the resolution plan, did not raise any objection before the NCLT or NCLAT and is receiving 100% of its dues under the resolution plan. Learned senior counsel has also referred to the judgment in EBIX Singapore Pvt. Ltd. v. Committee of Creditors of Educomp H Solutions Ltd. and Anr.: (2022) 2 SCC 401 to submit that the resolution

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plan between a successful resolution applicant and the CoC would be A binding. Thus, being a part of CoC, SBI cannot subsequently raise a contrary stand to the stand taken by the CoC. 28.7. On the aspect of commercial wisdom of the CoC, emphatic reliance has been placed on the decisions of this Court in K. Sashidhar, Maharashtra Seamless, Essar Steel, Jaypee Kensington, Kalpraj B Dharamshi (supra); and Pratap Technocrats (P) Ltd. and Ors. v. Monitoring Committee of Reliance Infratel Ltd and Anr.: 2021 SCC OnLine SC 569 to submit that scope of interference in matters concerning the successful resolution plan is extremely narrow, and the challenge is only limited to matters ‘other than’ enquiry into the autonomy or commercial wisdom of the CoC as under Section 30(2) or 61(3) of the IBC. In the case at hand, since the resolution plan had been approved by the CoC there would be no case for any interference. 28.8. It has also been submitted on behalf of the resolution applicant that the CIRP had reached an advanced stage, resolution applicant had given a bank guarantee of Rs. 25 crore on 01.02.2021 in pursuance of approved resolution plan, the initial amount of Rs. 150 crore, which was required to be remitted within 45 days of the approval of the resolution plan, was deposited within 15 days and the resolution applicant has always been ready with the remaining funds. It has also been vehemently submitted that deliberate dilatory tactics have been adopted by the promoter to frustrate the process of CIRP, with substantial amount of time having been lost on account of the delays. 28.9. As regards the application bearing IA No. 168602 of 2022 in Civil Appeal Nos. 1682-1683 of 2022 filed by the promoter and erstwhile director of the corporate debtor - seeking permission to bring on record subsequent facts that during the pendency of these appeals his proposal of settlement under Section 12-A of the Code was passed by CoC in its nineteenth meeting held on 12.10.2022 by 100% voting power of members - learned counsel for resolution applicant has submitted that the very consideration of Section 12-A application of the promoter by CoC had been against the explicit direction of the Appellate Tribunal in the order dated 17.02.2022, whereby only 15 days’ time was allowed to the CoC to examine the pending or existing Section12-A proposal of the promoter; and such a proposal was indeed rejected by the CoC on 25.³.2022. Therefore, the only course available with CoC after such rejection was to continue with the fresh CIRP; and the CoC had no legal authority to H

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A consider or vote on a new settlement proposal of the promoter after issuance of fresh Form G. Learned counsel would submit that the direction of the Appellate Tribunal as regards consideration of Section 12-A proposal of the promoter was exhausted when the settlement proposal was rejected by CoC in its eleventh meeting on 25.³.2022 and a fresh Section 12-A application could not have been entertained by the CoC in B any case.

29Copy pinpoint29. On another aspect, in CA No. 1827 of 2022, learned senior counsel for the appellant, Mr. C. Aryama Sundaram, appearing against Dharani Finance (the related party), has relied on various decisions of this Court including those in Phoenix ARC, Pratap Technocrats, and C Kalpraj Dharamshi (supra) as also in Facor Alloys Ltd. v. Bhuvan Madan and Ors.: Civil Appeal No. 5129 of 2021 to submit that even though the resolution applicant has admitted certain dues towards related parties, the final resolution plan did not provide for any payment and the plan was upheld by this Court in these cases. On previous occasions, D this Court as well as other fora had differentiated between related and non-related parties under resolution plans. Learned senior counsel would argue against the proposition that a related party could be part of the CoC when it is a financial creditor. Further, it has been submitted that Article 14 of the Constitution in stricto sensu would not be applicable to the decision of the CoC, as it is not a ‘State’ as defined under Article 12 E of the Constitution.

30Copy pinpoint30. Learned senior counsel Mr. Vijay Narayan appearing on behalf of the resolution professional has mainly questioned the findings and observations in the order impugned as regards the process adopted and steps taken by RP and has made a variety of submissions as follows: F 30.1. As regards the question of valuation, it has been submitted that the only responsibility of RP under Regulation 35(2) of the CIRP Regulations has been to share the fair value and liquidation value with the members of CoC after obtaining a confidentiality undertaking, which was done in the present case. There is no requirement to provide a copy of the report to the CoC or any other stakeholder. On the contention of valuation under the Companies (Valuation) Rules of 2017, it has been submitted that the interim resolution professional appointed three sets of valuers for the three main classes of assets. 30.1.1. With respect to the physical valuation of assets, learned senior counsel emphasised on agenda item No. 4 of the fourth CoC

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meeting, wherein it was clearly mentioned that the valuers visited the A property of the corporate debtor. 30.1.2. Insofar as the issue of non-core assets not being valued is concerned, it was submitted on behalf of RP that although the value of non-core assets was fairly insignificant, in the seventh CoC meeting dated 29.12.2020, the RP informed that the second valuer Mr. G Vaidya B Ramana, visited the premises for non-core assets and had subsequently submitted his report. The statement containing the said reports was placed before the Tribunal. It has, thus, been submitted that it was incorrect for the Tribunal to render a finding that the valuation of non-core assets had not been done in the present case. C 30.2. As regards non-publication of Form-G on the website, it has been argued that the same was published in all leading newspapers on 09.08.2020 and the then IRP had emailed IBBI to intimate them that there was some technical issue in uploading the said form on the website, with a request to upload the same. Thus, all the requisite steps having been reasonably taken, the process that had reached an advanced stage could not have been annulled on such a technicality. 30.³. Further, while dealing with the issue of not placing the revised resolution plan before the CoC, reliance has been placed on the ninth CoC meeting dated 22.01.2021 with the submissions that the resolution plan was approved with 87.39% of the total voting share and the resolution applicant was only required to provide for redistribution to ensure that the dissenting financial creditors were given their share in terms of Section 30(2)(b) of the Code. Pursuant to this, the resolution applicant submitted the modified resolution plan in which the allocation for the unsecured dissenting financial creditors was revised from 29 crore to 49.13 crore. F The revised plan was then placed before the Coc in the tenth CoC meeting and no objections were raised at that time. 30.4. It has also been submitted that the settlement proposal put forth by the corporate debtor was not in consonance with the mandate specified under Regulation 30-A of the CIRP regulations read with Section G 12-A of IBC. 30.5. On the issue of increase in the fee of RP which was not raised before the NCLT and was only raised before the NCLAT, it has been submitted that the request for revision of fee had indeed been H

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A made with reasons for said revision, much prior to the date on which the resolution plan was approved by the CoC. 30.6. It has also been submitted that the issue of ineligibility of the resolution applicant was not raised before NCLT but, NCLAT in its impugned order, has held him ineligible. In this regard, the RP could have only carried out public domain search and take into account the affidavit of compliance submitted by resolution applicant in view of Regulation 39 of the CIRP Regulations. 30.7. Coming to the allegation by Dharani Finance regarding discriminatory treatment for being a related party creditor, it has been submitted that there is a need only to ensure that the plan provides for payment to financial creditors (including dissenting financial creditors) entitled to vote. Placing reliance on Section 30(2)(b)(ii), Section 21 and Regulation 38(1), it has been argued that the approved plan is in accordance with the Code and the Regulations.

D 30.8. In closing, it has been argued by the learned senior counsel for the resolution professional that he has preferred applications against the promoter-director of the corporate debtor under Section 43 of the Code seeking avoidance of certain transactions which are preferential in nature. The said applications are pending before the NCLT for adjudication. With regard to these avoidance applications, however, E reliance on a judgement of the Delhi High Court in Venus Recruiters Private Limited v. Union of India and Ors.: 2020 SCC Online Del. 1479 is of no avail as in the said case, the High Court has examined the jurisdiction of the Adjudicating Authority to entertain an application under Section 43 after the approval of the resolution plan.

31Copy pinpoint31. Learned senior counsel Mr. Mukul Rohatgi appearing on behalf of Dr. Perisamy Palani Gounder (promoter and erstwhile director), has supported the order impugned while contesting the submissions made on behalf of the appellant. 31.1. Learned senior counsel has submitted that the CoC approved G the resolution plan in question without considering the settlement proposals put forth by the promoter under the letters dated 21.01.2021 and 08.³.2021, for settling with all creditors and for withdrawal of CIRP under Section 12-A of the Code. While placing reliance on the decision of this Court in Swiss Ribbons (P) Ltd. and Anr. v. Union of India and Ors.: (2019) 4 SCC 17, it has been submitted that the promoter’s H

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proposals were not even placed as agenda items and hence, the CoC A had not been given an opportunity to properly consider the corporate debtor as a going concern; rather CIRP was converted into a mere debt recovery process by ignoring other creditors and shareholders. It has been argued that the contesting promoter has been putting forth sincere efforts to preserve the corporate debtor as a going concern but his genuine efforts were sought to be frustrated by hasty and illegally conducted CIRP and thereby, the approved resolution plan was essentially giving away the substantial assets of the corporate debtor at a highly undervalued price. Thus, the decision of the Appellate Tribunal in this case is correct on law as also on facts. 31.2. It has also been vehemently argued that the resolution plan in question is contrary to law, as it clearly violates the underlying principles of Section 88 of the Trusts Act and Section 164(2)(b) of the Companies Act, 2013. The main plank of submissions with respect to violation of Section 88 of the Trusts Act has been that there is a conflict of interest, as the appellant is competing in his capacity as an individual with interests of a trust in which he was the founding managing trustee. Further, it has already been ruled by the resolution professional that the said trust Sri Balaji Vidyapeeth was ineligible to be a resolution applicant due to its status as a charitable trust and a non-profit making entity. In the face of these facts, the appellant simultaneously submitting a resolution plan in his individual capacity by taking support from financial credentials of the same trust, basically sought to achieve indirectly which he could not directly. Furthermore, the fact that the trust was a prospective resolution applicant and was found to be ineligible was a fact suppressed from the knowledge of the COC. 31.2.1. It has also been submitted that the resolution applicant’s F plan to convert Coimbatore property into Hospital would directly result in a conflict of interest and breach of fiduciary duties owed by him as managing director of the company MGM Healthcare Private Limited. This, according to the learned counsel would be in direct violation of Section 166(4) of the Companies Act which prohibits a director of the G company from involving himself in a situation in which he may have direct or indirect interest that conflicts or possibly may conflict, with the interest of the company. For this reason too, the resolution plan in question is contrary to law and cannot pass muster under Section 30(2)(e) of the Code. H

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A 31.2.2. Another argument by the learned senior counsel on behalf of promoter has been that the appellant is not eligible to submit a resolution plan under Section 29A(e) of the Code. It has been argued that the resolution applicant has been the director of a company named ‘International Aviation Academy Private Limited’; and as per the audited financial statements of the said company for 2010-2011 to 2017-2018, B there was evidence that Rs. 12,03,000 had been collected as “share application money pending allotment” and had not been refunded. This would result in the same being treated as an “unrefunded deposit” within the meaning of the proviso to Explanation (A) of Rule 2(1)(c)(viii) of the Companies (Acceptance of Deposits) Rules, 2014 and result in disqualification of the appellant-resolution applicant, from being a director under Section 164(2)(b) of the Companies Act and, consequently, from being a resolution applicant in the CIRP in question. 31.³. It has also been submitted that the assets of the corporate debtor were grossly undervalued in the final resolution plan whereby, the assets worth more than Rs. 1600 crore were sought to be transferred only for a sum of about Rs. 423 crore. In order to support this line of argument, reliance has been placed on Regulation 35(1) and 35(2) of the CIRP Regulations. Regulation 35(1) provides that two registered valuers must submit an estimate of the ‘fair value’ and ‘liquidation value’ of the corporate debtor after physical verification to the resolution professional, and Regulation 35(2) requires the resolution professional to provide the aforesaid valuation to every member of the CoC. 31.³.1. It has been argued that in the present case, there was no physical verification because the appointed registered valuers were based in Delhi and sought to delegate the process of physical verification to their associates in Tamil Nadu. Concerns regarding this were also highlighted in the second CoC meeting dated 06.08.2020. Further, it has been submitted that the valuation of the non-core assets was carried out irregularly and not in accordance with Regulation 35 of the CIRP Regulations. In addition, only bare valuation figures were shared and the valuation reports were not furnished to the erstwhile directors and the members of CoC. Thus, according to the learned senior counsel, it was rightly noticed by NCLAT that mere production of the naked value of assets without detailed adjoining report would handicap the commercial wisdom of the CoC. Reliance has also been placed on the seventh CoC meeting to submit that the concern of resolution plan not reflecting true H

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value of the corporate debtor was expressed by the CoC members. It A has also been submitted that the resolution professional under the pretext of maintaining the corporate debtor as a going concern, has allowed approval of an illegal resolution plan that hands over assets of the Corporate Debtor at severe undervaluation. 31.³.2. Further, it has been contended that the decision in B Maharashtra Seamless (supra) would not be relevant to the present case because it does not refer to a situation in which the determination of fair value and liquidation value is done in an illegal manner and in a way that grossly undervalues the assets of the corporate debtor. In the present case, the total debt of the corporate debtor is much lower than the liquidation value of its assets. This apart, according to the learned C counsel, the proposition concerning the application of principles of res judicata remains wholly misplaced since the said proceedings in NCLAT were at the instance of a different party and the principal issue in the previous litigation had nothing to do with the resolution plan, or statutory violations in the CIRP. D 31.4. Dealing with the issue of non-publication of Form G on the website, it has been submitted that Regulation 36A(2)(iii) of the CIRP Regulations, which mandates the publication on the website of IBBI and the website of corporate debtor has been violated as it has been an admitted position that the same was not done by the resolution E professional. The actions of the resolution professional, therefore, had been in violation of Regulation 36A and Circular Bearing No. IP (CIRP)/ 006/2018 dated 23.02.2018. The resolution professional has claimed that the form could not be uploaded for technical reasons but has failed to explain the steps taken to rectify this deficiency in the CIRP. F 31.5. Coming to the issue of not placing the final resolution plan before the CoC, it has been submitted, with reference to the minutes of the ninth CoC meeting dated 22.01.2021, that when the resolution plan was put to vote, there was a requirement for the resolution professional to send the plan back to the resolution applicant to comply with Section 30(2) IBC. However, after this, the revised plan was directly placed G before the NCLT and not before the CoC which stands in violation of Sections 30(2), 30(4), 30(6) and 31 of the Code. Further, it has also been contended that Section 31 of the Code does not envisage any post facto ratification of a resolution plan. H

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A 31.6. With reference to the application to bring on record the subsequent event of acceptance of his settlement proposal under Section 12-A IBC by CoC with 100% voting powers of the members in its nineteenth meeting, placing reliance on Section 12-A and Regulation 30- A of CIRP Regulations, learned counsel has submitted that there is neither any bar on the submission of multiple settlement proposals for withdrawal B under the said Section nor a cut-off date within which the proposal has to be made during the CIRP. He would also argue that the application under Section 12-A styled as ‘withdrawal’ also calls into play the principle that the creditors are dominus litis in an insolvency proceeding and they have the right to withdraw a proceeding subject to approval by the C Adjudicating Authority. 31.7. Learned counsel for promoter would also contend that the resolution applicant has no vested right to have his plan accepted and implemented under the provisions of the Code. In response to the argument of the resolution applicant that resolution applicant had deposited D Rs. 150 crore which has not been returned, learned counsel for the promoter has submitted that during the eleventh CoC meeting, on the question of the promoter, the resolution professional replied that the process was between him and the resolution applicant and some procedural issues were to be addressed whereafter, the deposited money would be returned. E

32Copy pinpoint32. Learned senior counsel Mr. K.V. Vishwanathan, also appearing for the promoter, has re-emphasised that the revised plan was never put to vote and that there was duty of valuers to physically valuate the assets which they did not carry out. This apart, it has also been argued that the shareholders would not have the requisite locus to intervene in the CIRP F process, by placing reliance on the decision of this Court in Jaypee Kensington (supra).

33Copy pinpoint33. Mr. Dhruv Mehta, learned senior counsel appearing for the other promoter and erstwhile director Dr. V. Janakiraman has made largely the similar submissions, relying on the minutes of the ninth CoC G meeting that there was a violation of Section 30(4) and 30(6) of IBC. Learned senior counsel has further referred to the judgment in Essar Steel (supra) to emphasise on the point that the revised resolution plan was never placed before the CoC and hence, the entire process stands vitiated. H

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34Copy pinpoint34. Learned counsel for Dharani Finance, Ms. Haripriya A Padmanabhan has primarily argued against the treatment of related parties as a separate class for payment of dues under the resolution plan. It has been submitted that Dharani Finance is a non-banking financial institution, listed in Bombay Stock Exchange. In this case, it is a financial creditor and an operational creditor of the corporate debtor and even B though its claims of Rs. 1,94,14,024 and Rs. 4,81,62,175, of operational debt and financial debt respectively, were duly admitted, it was not paid anything under the resolution plan for being a related party. While placing reliance on the judgment in Phoenix ARC (supra), it has been argued that this Court has laid down the reasons for treating related parties as a separate class, and held that related parties should be excluded from the C CoC so that they do not interfere with the resolution process. The rationale behind this has been achieved by not allowing related parties to present the resolution plans or to become a part of the CoC. However, there is no reason for them to be treated as a separate class when it comes to payment of dues under the approved resolution plan. Further, it has been contended that the resolution professional in this case undertook a hasty process, without adjudicating on all the claims received by it. 34.1. Relying on the seventh and eighth CoC meetings, it has been submitted that there was a certain amount set apart for related parties, however, in the final resolution plan, there was no amount stated to be paid to the related parties and there had not been any discussion in the CoC in this regard. Thus, for Dharani Finance being an operational and a financial creditor, the failure to provide for discharge of its debt in the final resolution plan, is in violation of Sections 30(2)(b), (e) and (f) of the Code. It has been strenuously argued that at the very least, CoC must discuss whether Dharani Finance is to be repaid, which has not been done.

35Copy pinpoint35. Learned Solicitor General of India Mr. Tushar Mehta, appearing for SBI, has submitted that this financial creditor has a voting share of about 26% in the CoC with an admitted claim of Rs. 102.88 crore. As a matter of record, it has been accepted that SBI approved the resolution plan of Rs. 423 crore submitted by the resolution applicant within 87.39% of the voting share in CoC. It is submitted that the topmost priority of SBI is that the CIRP be decided in a definite time frame given that nearly 2 years have elapsed and further delay would cause deterioration in the asset value. Since the CoC had already taken steps in furtherance H

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A of the impugned order dated 17.02.2022, it has been prayed that the CoC be allowed to continue with the CIRP from the stage of fresh issuance of Form G; consideration of proposal under Section 12-A of the Code and also determine eligibility of appellant, on independent footing, uninfluenced by the observations of the NCLAT. B 35.1. In regard to the fresh proceedings during the pendency of these appeals (as noticed above), it has been submitted on behalf of SBI that after being given further opportunity, the promoter re-submitted the settlement proposal under Section 12-A IBC with deposit of upfront amount of Rs. 105 crore and a Bank Guarantee of Rs. 325 crore; and on being put to vote, this settlement proposal was approved by 100% voting C share in the CoC which deserves to be taken forward. Learned SG has relied on the decisions of this Court in Vallal RCK v. Siva Industries and Holdings Ltd. and Ors.: 2022 SCC OnLine SC 717 and Brilliant Alloys (P) Ltd. v. S. Rajagopal and Ors.: (2022) 2 SCC 544.

36Copy pinpoint36. Appearing for Edelweiss and associates, learned senior counsel D Mr. Rakesh Dwivedi has submitted that these financial creditors of the corporate debtor with total of about 21.13% voting share in CoC, too had voted in favour of the resolution plan in question; and the plan so approved with 87.39% of the voting share in CoC could not have been lightly interfered with. The learned counsel has contended that merely E for non-consideration of revised resolution plan, which was revised at the instance of CoC itself, the approval could not have been set aside overriding the commercial wisdom of CoC. It has also been submitted that the promoters’ earlier proposition with reference to Section 12-A of the Code was wholly ambiguous and could not have been countenanced in the manner presented before CoC or even before NCLAT. While F referring to certain other areas of concern including the amount deposited by the resolution applicant, it has been suggested on behalf of these financial creditors that CIRP must be allowed to go on while leaving promoter a right to propose a better resolution plan by way of a Swiss Challenge Process; and for that purpose, he should be made to deposit at least a sum of Rs. 471.70 crore in an escrow account prior to the voting on his settlement offer. Points for determination

37Copy pinpoint37. For what has been noticed hereinabove and looking to the overall scenario, the following principal points arise for determination in this batch of appeals:

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A. Whether the valuation process of the assets of the corporate A debtor had been in violation of the Regulations 27 and 35 of the CIRP Regulations and thereby, approval of the resolution plan had been in contravention of Sections 30(2) and 61(3) of the Code? B. Whether there had been non-compliance of Regulation 36- A(2)(iii) of the CIRP Regulations for want of publication of Form B G on the designated website not later than 75th day from the insolvency commencement date; and failure to advertise as mandated had a direct impact on the maximization of asset value, particularly when the entire CIRP was conducted during lockdown at the time of Covid-19 pandemic? C C1. Whether the resolution applicant is ineligible to submit a resolution plan in terms of Section 29-A(e) of the Code for being disqualified to act as a director under Section 164(2)(b) of the Companies Act? C2. Whether the resolution applicant is ineligible to submit a D resolution plan so as to act as alter ego of the trust “Sri Balaji Vidyapeeth” that had already been declared ineligible; and submission of plan by resolution applicant is barred by virtue of Section 88 of the Trusts Act? C³. Whether the resolution plan in question leads to violation of E Section 166(4) of the Companies Act and hence, cannot be approved in terms of Section 30(2)(e) of the Code? D1. Whether the Appellate Tribunal has erred in holding that the resolution plan in question, which was placed before the Adjudicating Authority for approval, was void and non-est in law F because in the ninth CoC meeting dated 22.01.2021, the resolution plan was sent back to the resolution applicant for further revision; and the revised resolution plan thereafter submitted by the resolution applicant on 25.01.2021 was directly filed before the Adjudicating Authority without being put to vote before CoC? G D2. Whether the Appellate Tribunal has erred in making observations against increase of the fees of the resolution professional and assuming the possibility of its impact on his decision to submit the resolution plan before the Adjudicating Authority without approval of CoC? H

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A E. Whether the Appellate Tribunal has erred in applying the principles of non-discrimination in relation to related party of corporate debtor and thereby holding against the resolution plan in question for want of provision for related party? F. Whether the Appellate Tribunal has erred in holding that settlement offer of the promoter in terms of Section 12-A of the Code was not placed for consideration of CoC; and as to whether non-consideration of such a proposal has any bearing on the question of approval of the resolution plan in question? G. What is the impact and effect of the subsequent events, particularly of the approval of settlement offer of the promoter by the CoC in its nineteenth meeting held on 12.10.2022 by 100% majority of the voting share? Relevant statutory provisions

38Copy pinpoint38. We have taken note of the parties and their respective positions; the relevant factual and background aspects that have led to the present set of appeals, including various meetings of the CoC and other events that occurred during the CIRP; the impugned orders of the NCLT and NCLAT dated 15.07.2021 and 17.02.2022 respectively; and the principal points to be determined in these appeals. Before proceeding further, worthwhile it would be to take note of the statutory provisions, which are relevant to the contentions urged in these appeals 23. 38.1. We may also take note of some of the other relevant statutory provisions of the IBC including Section 12-A which provides for withdrawal of application admitted under Sections 7, 9 or 10; Section 21 F in regard to constitution and composition of the CoC; Section 24 which specifies about meetings of the CoC; Section 25 which lays down the duties of the resolution professional in respect to the corporate debtor; Section 29-A which provides that certain persons may be ineligible to be resolution applicants; Section 30 relating to submission of resolution plan; Section 31 which provides for approval of the resolution plan; Section 32 G which provides for appeal from order approving resolution plan; Section 61 which lays down the procedure and grounds of appeal before the Appellate Tribunal ; and Section 238 which states that the Code has an overriding power over other laws. These provisions read as follows: - 23 It may be observed that the relevant provisions have been extracted herein as presently H noticeable, while indicating, as far as possible, the amendments thereto.

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“24Section 12A. Withdrawal of application admitted under section 7, 9 or 10.— The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent. voting share of the committee of creditors, in such manner as may be specified. Section 21. Committee of creditors. -(1) The interim resolution professional shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors. C (2) The committee of creditors shall comprise all financial creditors of the corporate debtor: Provided that a 25[financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor,] shall not have any right of representation, participation or voting in a meeting of the committee of creditors: 26 [Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares 27[or completion of such transactions as may be prescribed], prior to the insolvency commencement date.] (3) 28[Subject to sub-sections (6) and (6A), where] the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them. G 24 Ins. by Act 26 of 2018, sec. 9 (w.r.e.f. 6-6-2018). 25 Subs. by Act 26 of 2018, sec. 15(i)(a), for “related party to whom a corporate debtor owes a financial debt” (w.r.e.f. 6-6-2018). 26 Ins. by Act 26 of 2018, sec. 15(i)(b) (w.r.e.f. 6-6-2018). 27 Ins. by Act 1 of 2020, sec. 7 (w.r.e.f. 28-12-2019). 28 Subs. by Act 26 of 2018, sec. 15(ii), for “Where” (w.r.e.f. 6-6-2018). H

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A (4) Where any person is a financial creditor as well as an operational creditor, - (a) such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in the committee of creditors, with voting share proportionate to the extent of financial debts owed to such creditor; (b) such person shall be considered to be an operational creditor to the extent of the operational debt owed by the corporate debtor to such creditor. (5) Where an operational creditor has assigned or legally transferred any operational debt to a financial creditor, the assignee or transferee shall be considered as an operational creditor to the extent of such assignment or legal transfer. (6) Where the terms of the financial debt extended as part of a consortium arrangement or syndicated facility 29[***] provide for D a single trustee or agent to act for all financial creditors, each financial creditor may- (a) authorise the trustee or agent to act on his behalf in the committee of creditors to the extent of his voting share; (b) represent himself in the committee of creditors to the extent E of his voting share; (c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself in the committee of creditors to the extent of his voting share; or F (d) exercise his right to vote to the extent of his voting share with one or more financial creditors jointly or severally. 30 [(6A) Where a financial debt— (a) is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act G as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors;

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(b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors; (c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors, C

and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share. D (6B) The remuneration payable to the authorised representative- (i) under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial debt or the relevant documentation; and (ii) under clause (b) of sub-section (6A) shall be as specified which E shall be form part of the insolvency resolution process costs.] 31 [(7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6A). F (8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one per cent. of voting share of the financial creditors: Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall comprise of such persons to exercise such functions in such G manner as may be specified.] (9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation 31 Subs. by Act 26 of 2018, sec. 15(v), for sub-sections (7) and (8) (w.r.e.f. 6-6-2018). H

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A to the corporate debtor at any time during the corporate insolvency resolution process. 10) The resolution professional shall make available any financial information so required by the committee of creditors under sub- section (9) within a period of seven days of such requisition. B Section 24. Meeting of committee of creditors. - (1) The members of the committee of creditors may meet in person or by such electronic means as may be specified. (2) All meetings of the committee of creditors shall be conducted by the resolution professional. C (3) The resolution professional shall give notice of each meeting of the committee of creditors to- (a) members of 32[committee of creditors, including the authorised representatives referred to in sub-sections (6) and (6A) of section D 21 and sub-section (5)]; (b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be; (c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent of the debt. E (4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings: Provided that the absence of any such director, partner or representative of operational creditors, as the case may be, shall not invalidate proceedings of such meeting. (5) 33[Subject to sub-sections (6), (6A) and (6B) of section 21, any creditor] who is a member of the committee of creditors may appoint an insolvency professional other than the resolution professional to represent such creditor in a meeting of the committee of creditors:

32 Subs. by Act 26 of 2018, sec. 18(i), for “Committee of creditors” (w.r.e.f. 6-6-2018). 33 H Subs. by Act 26 of 2018, sec. 18 (ii), for “Any creditor” (w.r.e.f. 6-6-2018).

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Provided that the fees payable to such insolvency professional A representing any individual creditor will be borne by such creditor. (6) Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor. (7) The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board. B

(8) The meetings of the committee of creditors shall be conducted in such manner as may be specified. Section 25. Duties of resolution professional.- (1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor. (2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:— (a) take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor; (b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings; E (c) raise interim finances subject to the approval of the committee of creditors under section 28; (d) appoint accountants, legal or other professionals in the manner as specified by Board; F (e) maintain an updated list of claims; (f) convene and attend all meetings of the committee of creditors; (g) prepare the information memorandum in accordance with section 29; 34 G [(h) invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions 34 Subs. by Act 8 of 2018, sec. 4, for clause (h) (w.r.e.f. 23-11-2017). H

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A as may be specified by the Board, to submit a resolution plan or plans.] (i) present all resolution plans at the meetings of the committee of creditors; (j) file application for avoidance of transactions in accordance with Chapter III, if any; and (k) such other actions as may be specified by the Board. 35 [Section 29A. Persons not eligible to be resolution applicant.– A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person,- (a) is an undischarged insolvent; (b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, D 1949 (10 of 1949); (c) 36[at the time of submission of the resolution plan has an account,] or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949) 37[or the guidelines of a financial sector regulator issued under any other law for the time being in force,] and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor: Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan: G

35 Ins. by Act 8 of 2018, sec. 5 (w.r.e.f. 23-11-2017). 36 Subs. by Act 26 of 2018, sec. 22(i)(A), for “has an account,” (w.r.e.f. 6-6-2018). 37 Ins. by Act 26 of 2018, sec. 22(i)(B) (w.r.e.f. 6-6-2018). 38 H Ins. by Act 26 of 2018, sec. 22(i)(C) (w.r.e.f. 6-6-2018).

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38 [Provided further that nothing in this clause shall apply to a A resolution applicant where such applicant is a financial entity and is not a related party to the corporate debtor. Explanation. I.-For the purposes of this proviso, the expression “related party” shall not include a financial entity, regulated by a financial sector regulator, if it is a financial creditor of the corporate B debtor and is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares 39[or completion of such transactions as may be prescribed], prior to the insolvency commencement date. C Explanation. II.-For the purposes of this clause, where a resolution applicant has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset and such account was acquired pursuant to a prior resolution plan approved under this Code, then, the provisions of this clause D shall not apply to such resolution applicant for a period of three years from the date of approval of such resolution plan by the Adjudicating Authority under this Code;] 40 [(d) has been convicted for any offence punishable with imprisonment— E

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41 A [Provided that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I;] (f) is prohibited by the Securities and Exchange Board of India from trading in securities or accessing the securities markets; (g) has been a promoter or in the management or control of a B corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this Code: 42 [Provided that this clause shall not apply if a preferential C transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place prior to the acquisition of the corporate debtor by the resolution applicant pursuant to a resolution plan approved under this Code or pursuant to a scheme or plan approved by a financial sector regulator or a D court, and such resolution applicant has not otherwise contributed to the preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction;] (h) has executed 43[a guarantee] in favour of a creditor in respect of a corporate debtor against which an application for insolvency E resolution made by such creditor has been admitted under this Code 44[and such guarantee has been invoked by the creditor and remains unpaid in full or part]; (i) 45[is] subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; or F (j) has a connected person not eligible under clauses (a) to (i) 46 [Explanation. I]. — For the purposes of this clause, the expression “connected person” means—

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A Regulations, 2017 made under the Foreign Exchange Management Act, 1999 (42 of 1999); (d) an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security B Interest Act, 2002 (54 of 2002); (e) an Alternate Investment Fund registered with the Securities and Exchange Board of India; (f) such categories of persons as may be notified by the Central Government.]] C Section 30. Submission of resolution plan.-(1) A resolution applicant may submit a resolution plan 50[along with an affidavit stating that he is eligible under section 29A] to the resolution professional prepared on the basis of the information memorandum.

D (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan— (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the 51[payment] of other debts of the corporate debtor; 52 E [(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than— (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or F (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the G resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors

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in accordance with sub-section (1) of section 53 in the event of a A liquidation of the corporate debtor. Explanation 1.—For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2.— For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor— (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or D (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;] (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; E (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. F 53 [Explanation.— For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a G contravention of that Act or law.] (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). 53 Ins. by Act 26 of 2018, sec. 23(ii)(B) (w.r.e.f. 6-6-2018) H

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54 A [(4) The committee of creditors may approve a resolution plan by a vote of not less than 55[sixty-six] per cent. of voting share of the financial creditors, after considering its feasibility and viability, 56[the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of B the security interest of a secured creditor] and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, C 2017(Ord. 7 of 2017), where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in D the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A: E Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub- section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub- section.] F 57 [Provided also that the eligibility criteria in section 29A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (Ord. 6 of 2018) shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code G (Amendment) Ordinance, 2018 (Ord. 6 of 2018).]