The rejection of a Resolution Plan must comply with statutory requirements, and commercial wisdom of the Committee of Creditors is paramount, limiting the adjudicatory review.

JUDGMENT

ASHOK BHUSHAN, J.

These two appeals have been filed against the same order of the Adjudicating Authority dated 05.04.2024 passed in I.A. No. 1394/2023 in C.P. (IB) No. 38/2020, by which order Adjudicating Authority has rejected the I.A. 1394/2023 filed by the Resolution Professional (RP) for approval of the Resolution Plan submitted by M/s. Eagle Fashions Private Ltd & Anr. Both the RP and Successful Resolution Applicant (SRA) aggrieved by rejection of the Resolution Plan has come up in these appeals.

2. Brief facts giving rise to these appeals are:

i. On an application filed by the IDBI bank under Section 7, Corporate Insolvency Resolution Process (CIRP) commenced against the Corporate Debtor, Sumeet Industries Ltd. by order dated 20.12.2022.

ii. On 04.03.2023, Interim Resolution Professional (IRP) was replaced and Mr. Satyendra Prasad Khorania was appointed as a RP.

iii. Registered valuers were appointed in Second Committee of Creditors (CoC) Meeting

iv. Form G was issued and thereafter Request for Resolution Plan (RFRP) and evaluation matrix was issued, in response to the RFRP, 5 Resolution Plans were received.

v. The CoC considered the Resolution Plan received in the CIRP of the Corporate Debtor and the CoC in its commercial wisdom approved the Resolution Plan submitted by M/s. Eagle Fashions Private Limited & Ors. with 74.90% voting shares.

vi. Letter of Intent (LoI) was issued on 20.11.2023 by the RP to SRA who unconditionally accepted the LoI.

vii. RP filed an IA under Section 30 (6) read with Section 31 being I.A. No.1394/2023 seeking approval of the Resolution Plan submitted by SRA.

3. Application came to be listed before the Adjudicating Authority on several dates. Adjudicating Authority reserved the order on 11.03.2024 and by impugned order dated 05.04.2024, rejected the application filed by the RP, aggrieved by which order, these appeals have been filed.

4. Learned Counsel for the RP challenging the impugned order submits that the Adjudicating Authority while rejecting the Resolution Plan has observed that RP has not submitted copy of Information Memorandum, RFRP, Valuation Report, receipt of Performance Security and Minutes of the 8th Meeting of the CoC. Whereas in hearing no query or any documents were asked for from the RP. It is submitted that in event Adjudicating Authority had given an opportunity, RP could have submitted all the necessary documents for consideration of the Resolution Plan and rejecting the Resolution Plan on the ground that RP has not submitted, the aforesaid documents was not appropriate.

5. It is further submitted that Adjudicating Authority has also made the observation that claim of Statutory Authorities has not been accepted by the RP, whereas decision of RP not to accept the claim of the Statutory Authority was never challenged. The observation of the Adjudicating Authority that liquidation is better option cannot be ground for rejecting the Resolution Plan. All the Resolution Applicants were subjected to Swiss Challenge Method to determine the maximum value of the Corporate Debtor. Resolution Applicants were also given opportunity to revise their Resolution Plans.

6. Learned Counsel for the SRA also submitted that SRA was fully eligible under Section 29-A and observation in the order that it has not been disclosed the dealing of the SRA with Corporate Debtor is not correct.

7. The Adjudicating Authority in Paragraph 20 has noted the following which led to the rejection of application. Para 20 of the order is as follows:

“20. We have heard the learned counsel for the applicant/RP and perused the material available on record. It is noted that :

a) The RP filed the Compliance Cert