Broadband Pacenet (India) Private Limited vs Reliance Commercial Finance Limited

Headnote Court Copy Facts Arguments Court observation Judicial Analysis Case Map Category Hierarchy Table of Content

2023 Supreme(Online)(NCLT) 1794

NATIONAL COMPANY LAW TRIBUNAL
H.V. Subba Rao, Madhu Sinha, JJ
Broadband Pacenet (India) Private Limited – Appellant
Versus
Reliance Commercial Finance Limited – Respondent
I.A No. 675 of 2023 | CP (IB) No: 4001 of 2019

Important Points

The approval of a resolution plan under the Insolvency and Bankruptcy Code must comply with statutory requirements, and the commercial decisions of the Committee of Creditors are paramount in this process.

Subject

Insolvency Law - Corporate Insolvency Resolution Process

Act Referred

Insolvency and Bankruptcy Code, 2016: S.30, S.31, S.7, S.25, S.60, S.12, S.29A, S.38, S.39

Headnote

(A) Insolvency and Bankruptcy Code, 2016 - Sections 30(2)(a), (b), (c), (d), (e), (f), 31(1) - Application for approval of Resolution Plan filed by Resolution Professional of Corporate Debtor - Plan approved by 78% of Committee of Creditors - Court must ensure compliance with provisions of the Code and Regulations as per commercial wisdom of Committee of Creditors - Resolution Plan meets requirements of the Code; its approval secures interests of stakeholders without contravening any law - No claims outside the plan are permitted post approval. (Paras 9, 10, 12, 13, 14, 15, 21)

(B) Judicial Review - Scope of judicial review is circumscribed by the Code - Adjudicating Authority's role is limited to verifying compliance with specified requirements of Resolution Plan. (Paras 1.1, 1.2, 1.3)

Facts of the case:
The application was for the approval of a Resolution Plan under Sections 30 and 31 of the Insolvency and Bankruptcy Code, filed by the Resolution Professional for Broadband Pacenet (India) Private Limited, in favor of Marwari Media Corporation Private Limited, which received requisite support from the Committee of Creditors during the insolvency resolution process initiated by a petition against the Corporate Debtor.

Findings of Court:
The Resolution Plan is approved since it adheres to the requirements of the Insolvency and Bankruptcy Code and incorporates provisions for managing the Corporate Debtor, ensures timely payments towards insolvency resolution process costs, and balances stakeholders' interests.

Issues: The main issues were compliance with the provisions of the Insolvency and Bankruptcy Code and the adequacy of the proposed payments to various stakeholders under the approved Resolution Plan.

Ratio Decidendi: The court reaffirmed the importance of the commercial wisdom of the Committee of Creditors in approving a Resolution Plan, noting that the Adjudicating Authority’s review is limited to confirming compliance with statutory requirements, rather than evaluating business judgments of the Committee.

Result: The application for the approval of the Resolution Plan is allowed.

Advocates:
For the Appellants/Petitioners: Mr. Ayush J. Rajani, Khushboo Shah
For the Respondents: AKR Advisors

Table of Content
1. factual background of the corporate debtor's insolvency. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7)
2. details regarding the submission and response for resolution plans. (Para 9)

ORDER

1. This is an Application filed under Section 30 (6) and Section 31 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “Code”) filed by the Resolution Professional of Broadband Pacenet (India) Private Limited (hereinafter referred to as “Corporate Debtor” seeking approval of the Resolution Plan submitted by a M/s Marwari Media Corporation Private Limited (the Successful Resolution Applicant) (SRA). The Resolution Plan submitted by the Successful Resolution Applicant was approved by 78% of the members of the Committee of Creditors of the Corporate Debtor (hereinafter referred to as “CoC”) at the 11^th CoC meeting held on 10th January 2023.

2. Factual Background of the Corporate Debtor

1. Before proceeding to the evaluation of the Plan, as to its compliance with Section 30 (2) of IBC, it is necessary to set out the factual matrix of the Corporate Debtor.

2. The Financial Creditor i.e., Reliance Commercial Finance Limited filed a Company Petition bearing no: 4001 of 2019 against the Corporate Debtor under Section 7 of the IBC before this Hon’ble Tribunal. By an Order dated 10^th March 2022 (CIRP Order) the Section 7 was admitted by the Adjudicating Authority and Mr. Ashok Kriplani was appointed as the IRP. Thereafter, a public announcement of CIRP in the present matter was published on 20 March 2022, inviting claims from all creditors to be filed by 31 March 2022.

3. During the 2nd Second meeting of Committee of Creditors held on 22 April 2022, the Coc resolved with 100 % of voting to replace , Mr. Ashok Kriplani with Mr. Gajesh Labhchand Jain. Accordingly, an order dated01 June 2022 passed by this Hon’ble NCLT.

4. The Applicant submits that the status of claims received and admitted as exist on the date of filing the present application is as follows:

5. The Applicant submits that, in accordance with Regulation 27 & 35 of IBBI (CIRP), Regulations 2016, Registered Valuers have been appointed to determine the Fair Value and Liquidation Value of the CD. The Applicant submits that since there is no land and building as assets of the Corporate Debtor the Applicant has not appointed any valuer for land and building.

List of Valuers	Class of Valuation
AAA Valuation Professionals LLP	SFA, P&M
Raj Kamal Saraogi	SFA
Paramjeet Singh	P&M

6. The Applicant submits that the above-mentioned valuers have submitted their Valuation Reports containing Fair Market Value and Liquidation Value to the Applicant / Resolution Professional. Accordingly, the fair market value and Liquidation value are as under:

(Amount in Rupees)

Particulars	FAIR VALUE			LIQUIDATION VALUE
	Valuer 1	Valuer 2	Average	Valuer 1	Valuer 2	Average
Plant & Machinery	2,54,600	2,90,000	2,72,300	2,03,680	2,37,000	2,20,340
S & FA	5,18,688	5,18,689	5,18,689	5,18,688	5,18,689	5,18,689
TOTAL	7,73,288	8,08,689	7,90,989	7,22,368	7,55,689	7,39,029

7. The Applicant submits that during 5th CoC held on 27 July 2022, the Applicant has informed the CoC members that he has admitted the claim received from Alchemist Asset Reconstruction Company Limited and reconstituted the CoC on 14 July 2022. The Applicant has also filed an updated list of creditors with NCLT and revised claims have been updated on IBBI website.

8. The Applicant submits that in terms of the provisions of Section25(2)(h) of the Code, Expression of Interest (“EoI”) was called from potential resolution applicants for the purpose of submission of resolution plans for the Corporate Debtor. The advertisement for inviting EoI was published on 11 July 2022 wherein last day for submission of EoI was 26 July 2022 and last day for submission of Resolution Plan was 09 September 2022.

9. The Applicant submits that thereafter few inquiries were received from the below mentioned interested parties.

i. Nakshatra Corporate Advisors Limited

ii. Om Regmi

iii. Jindal Steel & Power Ltd