Full Judgment Text
NONREPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S).1706 OF 2023
SREI MULTIPLE ASSET INVESTMENT
TRUST VISION INDIA FUND ….APPELLANT(S)
VERSUS
DECCAN CHRONICLE MARKETEERS
& OTHERS ….RESPONDENT(S)
WITH
CIVIL APPEAL NO(S).8323 OF 2022
AND
CIVIL APPEAL NO(S).8132 OF 2022
J U D G M E N T
Rastogi, J.
CIVIL APPEAL NO(S).1706 OF 2023
1. The instant appeal has been filed by the successful resolution
Signature Not Verified
Digitally signed by
Jayant Kumar Arora
Date: 2023.03.20
13:22:33 IST
Reason:
applicant (for short “SRA”) of the Corporate Debtor (Deccan
Chronicle Holdings Ltd.) whose Resolution Plan was approved by
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81.39% voting by the Committee of Creditors (CoC) and
conditionally by the adjudicating authority/National Company Law
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Tribunal (for short “NCLT”) by order dated 3 June, 2019, subject
to the outcome of I.A. No.155 of 2018 and that came to be decided
by the adjudicating authority/NCLT, Hyderabad Bench by order
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dated 14 August, 2019 and that became the subject matter of
challenge before the National Company Law Appellate Tribunal(for
short “NCLAT”) at the instance of the Corporate Debtor wherein it
was stated that what has been observed by the adjudicating
authority while disposing of I.A. No.155 of 2018 under its order
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dated 14 August, 2019, will amount to a modification/alternation
of the approved Resolution Plan by the CoC which is impermissible
in law.
2. The brief facts culled out from the record are that the
appellant is the successful resolution applicant (SRA) of the
Corporate Debtor – Deccan Chronicle Holdings Ltd. (DCHL), whose
Resolution Plan was approved by the CoC of the Corporate Debtor
with 81.39% voting share which was conditionally approved by the
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adjudicating authority (NCLT) by order dated 3 June, 2019.
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3. It has come on record that the Corporate Debtor/DCHL was
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incorporated on 16 December, 2002 under Certificate of
Incorporation issued by the Registrar of Companies, Hyderabad and
has been into the business of printing, publication and sale of daily
newspapers under the trade names, “Deccan Chronicle” (English)
and “Andhra Bhoomi” (Telugu) (hereinafter referred to as the
“trademarks”).
4. The Corporate Insolvency Resolution Process (for short “CIRP”)
was initiated under the Insolvency and Bankruptcy Code, 2016 (for
short “IBC”) against DCHL by Canara Bank (Financial Creditor)
before the adjudicating authority (NCLT). The petition filed by
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Canara Bank was admitted on 5 July, 2017 and the adjudicating
authority imposed Moratorium under Section 14 of the IBC staying
pending proceedings in all Courts against DCHL.
5. The Moratorium was extended for a further period of 90 days
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vide order of adjudicating authority dated 10 November, 2018.
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6. The CIRP period of the Corporate Debtor ended on 15
February, 2019. Pursuant to initiation of Resolution Process, the
Interim Resolution Professional (IRP) issued a public announcement
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and invited claims from the creditors of the Corporate Debtor. On
receiving the claims, the IRP collated the same and constituted a
Committee of Creditors (CoC).
7. That the Expression of Interest (EoI) was published in the All
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India edition of Business Standard dated 8 February, 2018 for a
widespread coverage with the last date for receipt of the EoIs being
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15 February, 2018 (6.00 p.m.) which was later extended upto 17
April, 2018 and after various rounds of meetings of the CoC, the
Resolution Plan submitted by the appellant (SRA) was deliberated
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upon in the 20 meeting of the CoC held on 10 December, 2018
and finally the Resolution Plan of the appellant was approved by the
CoC with 81.39% of voting rights.
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8. On 11 December, 2018, as per the provisions of Section 30(4)
of the IBC read with Regulation 39 of the Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016, the Resolution Plan of the
appellant was found to be in compliance with the mandatory
provisions of Section 30(2) of the IBC and the relevant Regulations,
and it was later approved by the adjudicating authority by an order
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dated 3 June, 2019 and the same became binding on Corporate
Debtor, its employees, members, creditors and all stakeholders
involved in the Resolution Plan, but as regards the brand name of
the Corporate Debtor, application I.A. No.155 of 2018 was pending
seeking a declaration by the Corporate Debtor that it is the owner of
the trademarks (“Deccan Chronicle” and “Andhra Bhoomi”) and the
said trademarks be treated as part of the assets of the Corporate
Debtor.
9. After the Resolution Plan stood approved by the adjudicating
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authority under order dated 3 June, 2019 subject to condition in
reference to the rights over the brand name/trademarks of the
Corporate Debtor, the adjudicating authority later decided the
application I.A. No.155 of 2018 with a direction that the Resolution
Professional has established that it is the Corporate Debtor/DCHL
who has an exclusive right to use the trademarks “Deccan
Chronicle” and “Andhra Bhoomi” and also made a declaration that
the trademarks (“Deccan Chronicle” and “Andhra Bhoomi”) belong
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to the Corporate Debtor/DCHL under its order dated 14 August,
2019.
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10. The order passed in I.A. No.155 of 2018 by the NCLT dated
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14 August, 2019 became the subject matter of challenge at the
instance of the first respondent by way of an appeal before the
NCLAT.
11. The NCLAT, after hearing the parties, arrived to a conclusion
that the declaration made by the NCLT holding the ownership rights
of the Corporate Debtor over the trademarks “Deccan Chronicle”
and “Andhra Bhoomi” amount to a modification/alteration of the
approved Resolution Plan by CoC, which is impermissible in law
and held that the order of the adjudicating authority, in fact, has
transgressed its jurisdiction and accordingly set aside the order
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dated 14 August, 2019 passed in I.A. No.155 of 2018 under the
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order impugned dated 2 September, 2022, that became the
subject matter of challenge in appeal before this Court at the
instance of the appellant/SRA.
12. Mr. K.V. Viswanathan, learned senior counsel appearing for
the appellant submits that NCLAT has misinterpreted Clause 4.3
and Clause 11.12 of the Resolution Plan which categorically state
that the appellant holds unfettered and exclusive rights to the
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trademarks without any financial implications and with these
unforeseen commercial consequences if it only reserves the right to
use the trademarks, the Resolution Plan is a nonstarter. The NCLT
under its order has approved the Resolution Plan by 81.39% of the
voting of CoC and the finding recorded by the NCLAT that it
amounts to alteration of the conditions of approved Resolution Plan
is misconceived and needs to be interfered by this Court.
13. Learned counsel further submits that the NCLAT has
erroneously recorded in I.A. No.155 of 2018 seeking declaration of
ownership rights over the trademarks filed by the Resolution
Professional on its own accord, while ignoring the material on
record. Learned counsel has tried to take us to certain minutes of
the CoC to justify that what being decided by the adjudicating
authority while disposing of I.A. No.155 of 2018 is nothing but
approving the Resolution Plan, which in no manner tantamount to
alteration/modification of Clause 11.12 of the Plan and this being a
manifest error committed by the NCLAT under the order impugned
needs to be interfered by this Court.
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14. Per contra, Mr. P. Chidambaram, learned senior counsel for
the respondents, while supporting the findings returned by the
NCLAT under order impugned submits that the Resolution Plan,
particularly, with reference to the right to trademarks was only
confined to the perpetual exclusive right to use the trademarks,
namely, “Deccan Chronicle” and “Andhra Bhoomi” without any
financial implications for the purpose of running its business, but
while disposing of I.A. No.155 of 2018 by the adjudicating authority,
it has altered/modified the Resolution Plan already approved, which
was not within its jurisdiction and Section 60(5) or Section 238 of
the Code do not permit the adjudicating authority to decide the
issue in respect to ownership of trademarks and since declaration
of ownership over the trademarks was approved by the adjudicating
authority, it is impermissible in law and such a declaration could be
claimed by the person aggrieved under Section 134 of the
Trademarks Act, 1999. Placing reliance on the judgment of this
Court in
Embassy Property Developments Private Limited v.
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State of Karnataka and Others , learned counsel submits that
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(2020) 13 SCC 308
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the finding returned by the NCLAT under the order impugned is
duly supported by law and needs no interference.
15. We have heard learned counsel for the parties and with their
assistance perused the material available on record.
16. Before we take note of the submissions made by counsel for
the parties, it will be apposite to take note of the Resolution Plan of
Corporate Debtor (Decan Chronicle Holdings Ltd. or DCHL) dated
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11 December, 2018 and Clauses 4 (brands of the Corporate
Debtor) and 11.12, in particular with which we are concerned in the
instant proceedings, as extracted hereinbelow:
“ 4. BRANDS OF THE CORPORATE DEBTOR
4.1 The Corporate Debtor as of now use the following
brands/trademarks for running its business:
a. DECCAN CHRONICLE
b. ANDHRA BHOOMI
c. THE ASIAN AGE
d. FINANCIAL CHRONICLE
e. DECCAN CHARGERS; AND
f. ODYSSEY.
4.2 One or more of the above brands are charged in favour of one or
more of Financial Creditors or any other creditors including
without limitation the following Financial Creditors:
a. AXIS BANK LIMITED
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b. CANARA BANK LIMITED
c. ICICI BANK LIMITED
d. IDBI BANK LIMITED
e. IDFC BANK LIMITED; and
f. KOTAK MAHINDRA BANK LIMITED
4.3 In order to keep the Corporate Debtor as a viable going concern, it
is of utmost importance that all the 6 (six) brands as aforestated,
can be used freely by the Corporate Debtor without any
hindrance, limitation, restrictions, impediments, demur and
obstruction of any nature whatsoever. In order to achieve the
same, the above Financial Creditors shall be deemed to have
released their right under the relevant security documents with
respect to the said brands in favour of the Resolution Applicant on
and from the date the above Financial Creditors stand paid in
terms of Clause 3 of this Resolution Plan, in consideration of the
settlement arrived at by virtue of this Resolution Plan.
11. Prayer to the Adjudicating Authority
It is prayed to the Hon’ble Adjudicating Authority to sanction the
Resolution Plan along with following prayers, reliefs, waivers and
concessions:
11.1 The Adjudicating Authority to pass necessary orders/give
appropriate directions to give effect to the reorganizations of
shares capital of the Corporate Debtor as contemplated in
Clause 1, including reduction, consolidation and cancellation,
to the effect so that:
11.1.1 Upon approval of the Resolution Plan by the Hon’ble
Adjudicating Authority, any increase in the Authorised Share
Capital of the convertible debt into equity shares of the
corporate debtor shall not require any further consent or
approval from any shareholder, creditors or any other entity
(including without limitation any regulatory and
governmental authority) under the Applicable Laws;
11.1.2 At the time of capital reduction the requirement of
adding “and reduced” in the name of the corporate debtor
stands dispensed with;
11.1.3 The approval of this resolution plan by the
adjudicating authority is to be deemed to have waived all the
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procedural requirements in terms of Section 66 of the
Companies Act, 2013, and the NCLT (Procedure for Reduction
of Share Capital) Rules, 2016;
11.1.4 The approval of the CoC to the Resolution Plan is to
be deemed to be the consent of the financial creditors to the
capital reduction and that each of such financial creditors by
the Adjudicating Authority under the Applicable Laws;
11.1.5 The cancellation of shares shall not require any other
procedure as required under the Companies Act, including
that under Section 66 of the Companies Act or regulations of
the SEBI;
11.1.6 The Adjudicating Authority approving the Resolution
Plan shall constitute adequate approval for such cancellation
of shares and accordingly, no further approval or consent
shall be necessary from any other person/Government or
Statutory Authority in relation to either or these actions
under any agreement, the constitution documents of the
Company or under any applicable law;
…….
11.12 Adjudicating Authority to pass necessary order/give
appropriate directions to give effect that the corporate
debtor has the perpetual exclusive right to use the
brands namely (i) DECCAN CHRONICLES; (ii) ANDHRA
BHOOMI; (iii) THE ASIAN AGE; (iv) FINANCIAL
CHRONICLE; (v) DECCAN CHARGERS; AND (vi) ODYSSEY
without any financial implications for the purposes of
running its business;
……”
17. It may be relevant to note that the Resolution Plan referred to
above was approved with majority of 81.39% voting rights of CoC
which is in compliance of Section 30(2) and 30(4) of the IBC.
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18. When the matter travelled for seeking approval by the
adjudicating authority (NCLT), it was conditionally approved by an
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order dated 3 June, 2019, subject to the result of I.A. No.155 of
2018 pending before the adjudicating authority in reference to the
brand names/trademarks of the Corporate Debtor. It will be
apposite to quote the extract of the order passed by the adjudicating
authority (NCLT) while granting conditional approval, which is
reproduced hereunder:
“16. The Resolution Applicant has to obtain necessary approval if
any required within one year as per Section 31(4) of the Code. The
Resolution Applicant further prayed for order/direction to use
brand name of the Corporate Debtor. However, an Application was
filed claiming exclusive right over the brand name/trademarks of
the Corporate Debtor. Subject to the result of the said Application,
the Resolution Applicant is entitled to use the brand
name/trademark of the Corporate Debtor as stated in Clause
11.12 of the Resolution Plan.
…
19. Thus, Resolution Plan dated 11.12.2018 submitted by
Resolution Applicant M/s SREI Multiple Asset Investment Trust
Vision India Fund, which is approved by members of CoC having
81.39% voting share stands approved subject to reliefs refereed to
at paras 12, 13, 14, 15, 16 & 17 stated above as per Section 31(1)
of the Code. In other words, I am satisfied with the Resolution Plan
as approved by Committee of Creditors under Section 30(4) of the
Code and it meets the requirement as referred to in Section 30 (2)
of IBC, 2016 and therefore, the Resolution Plan stands approved
and the same is binding on Corporate Debtor, its employees,
Members, Creditors, Guarantors and stakeholders involved in the
Resolution Plan.
20. The moratorium order passed under Section 14 shall cease to
have effect from today.
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21. The Resolution Professional shall forward all records relating to
the conduct of the Corporate Insolvency Resolution Process and
the Resolution Plan to the Board to be recorded on its database.
22. The Resolution Applicant shall obtain necessary approval
required under any law for the time being in force within a period
of one year from the date of approval of the Resolution Plan or
within such period as provided for in such law.”
19. That after the conditional approval was granted by the NCLT
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under order dated 3 June, 2019, I.A. No.155 of 2018 was later
heard by the NCLT and that came to the decided by an order dated
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14 August, 2019. While upholding the exclusive right to use the
trademarks “Deccan Chronicle” and “Andhra Bhoomi” of the
Corporate Debtor, a further declaration was made that the
trademarks (“Deccan Chronicle” and “Andhra Bhoomi”) belong to
the Corporate Debtor/DCHL. Paras 37 and 38 of the order dated
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14 August, 2019 passed by the NCLT disposing of I.A. No.155 of
2018, are reproduced hereinbelow:
“37. Here, the question involved is who is using the Trademarks on
the date when CIRP against Corporate Debtor started. The
documents filed by Resolution Professional/Applicant herein
coupled with subsequent conduct of Corporate Debtor would
establish that it is the Corporate Debtor who has the right to use
the Trademarks “Deccan Chronicle” and “Andhra Bhoomi” and
they belong to Corporate Debtor.
38. The Application is allowed declaring Trademarks “Deccan
Chronicle” and “Andhra Bhoomi” belong to Corporate
Debtor/DCHL.”
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20. It may be relevant to note that if we look into the Resolution
Plan and particularly Clause 11.12 which has been referred to
hereinabove, it is confined to the perpetual exclusive right to use
the brands i.e. “Deccan Chronicle” and “Andhra Bhoomi”, etc. by
the Corporate Debtor without any financial implications for the
purpose of running its business and it was approved by the
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adjudicating authority under its order dated 3 June, 2019, but
since it was made subject to the result of pending I.A. No.155 of
2018, the adjudicating authority had approved so far as the
exclusive rights of the Corporate Debtor to use trademarks namely
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“Deccan Chronicle” and “Andhra Bhoomi” under its order dated 14
August, 2019, but at the same time, a further declaration was made
in para 38 holding that trademarks “Deccan Chronicle” and
“Andhra Bhoomi” belong to the Corporate Debtor, which indeed
does not reconcile with the Resolution Plan approved by the CoC
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and later by the adjudicating authority under its order dated 3
June, 2019.
21. The NCLAT, after taking into consideration the material
available on record and Clause 11.12 of the Resolution Plan, in
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para 16 of the order of the adjudicating authority (NCLT) returned a
finding that the ownership of the Corporate Debtor declared over
the trademark after the approval of the Resolution Plan by the CoC,
would amount to modification/alteration of the approved Resolution
Plan by CoC which is impermissible in law and is not in terms of
Section 60(5) of IBC.
22. It has not been disputed by learned counsel for the appellant
that once the Resolution Plan stands approved, no
alterations/modifications are permissible. It is either to be
approved or disapproved, but any modification after approval of the
Resolution Plan by the CoC, based on its commercial wisdom, is not
open for judicial review unless it is found to be not in conformity
with the mandate of the IBC Code.
23. It clearly manifests from the record that the Resolution Plan
was approved by the CoC with 81.39% of voting and it complied
with the requirement as contemplated under Section 30(2) and
30(4) of the IBC and so far as the exclusive right to use of brand
names of “Deccan Chronicle” and “Andhra Bhoomi” is concerned, a
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specific reference was made in the Resolution Plan, and to be more
particular in Clause 11.12 of the Resolution Plan.
24. It clearly indicates that what was approved by the CoC with
81.39% of its voting is to the effect that the Corporate Debtor has a
perpetual exclusive right to use the brands, namely, “Deccan
Chronicle” and “Andhra Bhoomi” and it nowhere indicates
regarding the right of ownership over the trademarks/brands,
“Deccan Chronicle” and “Andhra Bhoomi” of the Corporate Debtor.
But the adjudicating authority while adjudicating application I.A.
No.155 of 2018, apart from upholding the exclusive right to use the
trademarks, “Deccan Chronicle” and “Andhra Bhoomi”, made a
further declaration that trademarks belong to Corporate
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Debtor/DCHL under its order dated 14 August, 2019, which, in
our view, was a modification/alteration in the approved Resolution
Plan which indisputably is impermissible in law and this what the
NCLAT in para 32 of its impugned order has observed as under:
“32. In view of the law declared by Hon’ble Apex Court, applying
the same to the present appeal, we have no hesitation to conclude
that right or ownership, if any, claimed after approval of Resolution
Plan by CoC is extinguished and if ownership of Corporate Debtor
is declared over the Trademarks, it would amount to modification
or alteration of approved Resolution Plan by CoC which is
impermissible. Hence, the order of Adjudicating Authority to the
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extent of declaring the ownership of Corporate Debtor over the
Trademarks “Deccan Chronicle” and “Andhra Bhoomi” is illegal
and the Adjudicating Authority transgressed the jurisdictional
limits. Consequently, the order passed in I.A. No.155/2018 dated
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14 August, 2019 is liable to be set aside.”
25. This Court in Ebix Singapore Private Limited vs.
Committee of Creditors of Educomp Solutions Limited &
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Another , had held as under:
221. The residual powers of the adjudicating authority under IBC
cannot be exercised to create procedural remedies which have
substantive outcomes on the process of insolvency. The
framework, as it stands, only enables withdrawals from the CIRP
process by following the procedure detailed in Section 12A IBC
and Regulation 30A of the CIRP Regulations and in the situations
recognised in those provisions. Enabling withdrawals or
modifications of the resolution plan at the behest of the successful
resolution applicant, once it has been submitted to the
adjudicating authority after due compliance with the procedural
requirements and timelines, would create another tier of
negotiations which will be wholly unregulated by the statute. Since
the 330 days' outer limit of the CIRP under Section 12(3) IBC,
including judicial proceedings, can be extended only in exceptional
circumstances, this openended process for further negotiations or
a withdrawal, would have a deleterious impact on the corporate
debtor, its creditors, and the economy at large as the liquidation
value depletes with the passage of time. A failed negotiation for
modification after submission, or a withdrawal after approval by
the CoC and submission to the adjudicating authority, irrespective
of the content of the terms envisaged by the resolution plan, when
unregulated by statutory timelines could occur after a lapse of
time, as is the case in the present three appeals before us.
Permitting such a course of action would either result in a
downgraded resolution amount of the corporate debtor and/or a
delayed liquidation with depreciated assets which frustrates the
core aim of IBC.
2
(2022) 2 SCC 401
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222. If the legislature in its wisdom, were to recognise the concept
of withdrawals or modifications to a resolution plan after it has
been submitted to the adjudicating authority, it must specifically
provide for a tether under IBC and/or the Regulations. This tether
must be coupled with directions on narrowly defined grounds on
which such actions are permissible and procedural directions,
which may include the timelines in which they can be proposed,
voting requirements and threshold for approval by the CoC (as the
case may be). They must also contemplate at which stage the
corporate debtor may be sent into liquidation by the adjudicating
authority or otherwise, in the event of a failed negotiation for
modification and/or withdrawal. These are matters for legislative
policy.”
[emphasis supplied]
26. In other words, in terms of the approved Resolution Plan, it
was the perpetual exclusive right to use the brands, namely,
“Deccan Chronicle” and “Andhra Bhoomi”, by the Corporate Debtor
which were available to SRA i.e. the appellant herein and once it
has been approved by the adjudicating authority, certainly the right
to exclusive use of the trademarks belonging to the Corporate
Debtor, on being approved by the adjudicating authority, is always
available to the SRA i.e. the appellant, but not the ownership rights
of the trademarks of the Corporate Debtor.
27. Consequently, the appeal is devoid of substance and
accordingly dismissed. No costs.
28. Pending application(s), if any, shall stand disposed of.
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C.A. No.8323 of 2022 (Vision India Fund SREI Multiple Asset
Investment Trust v. IDBI Bank and Others)
29. Mr. K.V. Viswanathan, learned senior counsel, made a limited
submission that since a finding has been recorded in para 28 of the
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judgment impugned dated 2 September, 2022 that the Resolution
Plan stands approved by the adjudicating authority and which is
the subject matter of challenge at the instance of the appellant in
the connected appeal that may affect his right and for this limited
purpose, he has filed the instant appeal.
30. The apprehension shown by the appellant’s counsel is
misplaced.
31. In the light of the judgment passed by us today in Civil Appeal
No.1706 of 2023, the present appeal has become infructuous.
32. The appeal is dismissed as having become infructuous.
33. Pending application(s), if any, shall stand disposed of.
C.A. No.8132 of 2022 (IDBI Bank v. Mamta Binani & Others)
34. We have heard the counsel for the parties.
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35. The appellant is a member of Committee of Creditors and a
financial creditor of Deccan Chronicle Holdings (Corporate Debtor)
having 6.71% of the total outstanding admitted financial debt
against the Corporate Debtor and after compliance of Section 30(3),
the Resolution Plan has been approved by the CoC by a majority of
81.39% votes.
36. It has come on record that the appellant admittedly did not
challenge the approved Resolution Plan before the appellate
authority and once the Resolution Plan was approved by the CoC
and by the adjudicating authority (NCLT), that has rightly non
suited the claim of the appellant, as prayed for under the order
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impugned dated 2 September, 2022.
37. We find no reason to interfere in the order impugned. The
appeal is accordingly dismissed. No costs.
38. Pending application(s), if any, shall stand disposed of.
…………………………….J.
(AJAY RASTOGI)
…………………………….J.
(BELA M. TRIVEDI)
NEW DELHI;
MARCH 17, 2023.
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