K. SASHIDHAR vs. INDIAN OVERSEAS BANK

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL  APPEAL NO.10673 OF 2018 K. Sashidhar      …..Appellant(s)   :Versus: Indian Overseas Bank & Ors.        ....Respondent(s) WITH   C.A. N  o.10719 of 2018, C.A. No.10971 of 2018 and SLP (C) No.29181 of 2018 J U D G M E N T   A.M.   Khanwilkar, J. Leave granted in SLP (C) No.29181 of 2018. 1. All appeals were taken up for hearing at the notice stage 2. with the consent of the contesting respondents.  3. These appeals have arisen from the common judgment and order of the National Company Law Appellate Tribunal (for th short   “ NCLAT ”),   New   Delhi,   dated   6   September,   2018, Signature Not Verified Digitally signed by DEEPAK SINGH Date: 2019.02.05 14:36:57 IST Reason: rendered   in   appeals   filed   in   relation   to   the   insolvency resolution process under the provisions of the Insolvency and 2 Bankruptcy   Code,   2016   (for   short   “ I&B   Code ”)   concerning Kamineni Steel & Power India Pvt. Ltd. (for short “ KS&PIPL ”), having   its   registered   office   at   Hyderabad,   Telangana   and Innoventive   Industries   Ltd.   (for   short   “ ”)   having   its IIL registered office at Pune, Maharashtra.   4. The NCLAT affirmed the order passed by the National Company   Law   Tribunal,   Mumbai   Bench   (for   short   “ NCLT ”) recording rejection of the resolution plan concerning Mumbai IIL   and   directing   initiation   of   liquidation   process   under Chapter III of Part II of the I&B Code. As regards KS&PIPL, the NCLAT reversed the decision of the National Company Law Tribunal, Hyderabad (for short “ NCLT Hyderabad ”) which had approved   its   resolution   plan   and   instead   remanded   the proceedings to NCLT Hyderabad for initiation of liquidation process  in terms of Section 33 and 34 of the I&B Code.   The   NCLAT   held   that   as,   in   both   the   cases,   the 5. resolution plan did not garner support of not less than 75% of voting   share   of   the   financial   creditors   constituting   the Committee   of   Creditors   (for   short   “ ”)   the   same   stood CoC 3 rejected   and   thereby   warranted   initiation   of   liquidation process of the concerned corporate debtor, namely, KS&PIPL and IIL.  For considering the grounds of challenge in the respective 6. appeals, we deem it appropriate to advert to the relevant facts concerning the respective corporate debtor.   7. KS&PIPL was incorporated as a private limited company th on 20  October, 2008. Its steel division commenced operation th on   30   March,   2013.   The   company   was   functional   till  the Financial   Year   2014­15.   However,   it   could   not   continue beyond   this   period   due   to   deficient   working   capital   and various   other   factors   including   financial   crisis,   leading   to heavy operational losses and consequent erosion of the entire net   worth.   Attempts   were   made   to   revive   the   company   by forming a joint lenders forum by the consortium of banks. As that attempt did not fructify, the company filed an application with BIFR under Section 15(1) of Sick Industrial Companies   th (Special Provisions) Act, 1985 on 15   November, 2016. The   th said   proceedings   abated   due   to   a   notification   dated   25 4 November, 2016, as to the repeal of the Act. Eventually, the company filed a petition under Section 10 of the I&B Code read   with   Rule   7   of   the   Insolvency   and   Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking to initiate   Corporate   Insolvency   Resolution   Process   (CIRP) concerning the said company. That petition was admitted on th 10  February, 2017, by the NCLT Hyderabad and an Interim Resolution Professional (for short “ IRP ”) came to be appointed with directions to constitute a CoC. The CoC was constituted th and the first meeting was held on 8  March, 2017 to confirm the appointment of IRP and authorise the lead bank, namely the   Indian   Bank   to   inform   the   approved   valuers   that   they should proceed with their valuation. The second meeting of th CoC was held on 6   April, 2017, for taking on record the predicated   expenses   and   essential   costs   and   factory maintenance costs and to confirm about the operation of the bank  account with lead Bankers, Indian Bank  by IRP and Chief Financial Officer. In the third meeting of CoC, convened th on 12  May, 2017, the corporate debtor made a presentation 5 for a resolution plan, giving three options. In that meeting, it was   resolved   to   appoint   SBI   Capital   Markets   Limited   to determine   the   sustainable   debt   of   the   corporate   debtor   to enable the creditors to assess the viability   of the resolution th plan. In the fourth meeting of CoC, held on 27  June, 2017, the  resolution plan submitted  by the corporate debtor was reviewed and a draft Techno Economic Viability report by SBI Capital   Markets   Limited   was   also   considered.   It   is   not necessary to dilate on other aspects discussed and resolved in this   meeting.   As   the   statutory   period   of   180   days   for completion of  CIRP was to expire, an application was  filed before the NCLT Hyderabad for extending the time by a further th 90   days.   Thus,   the   NCLT   Hyderabad,   on   27   July,   2017, th extended further time by 90 days starting from 9   August, th 2017. The sixth meeting of the CoC was held on 24  August, 2017, when the corporate debtor submitted an expression of interest from AREA Group of Companies, Chandigarh to infuse Rs. 150 Crore in the form of debentures, subject to getting a firm   approval   from   the   lenders.   The   said   proposal   was 6 circulated   during   the   meeting   which   concluded   with   the resolution that the same be placed along with the final report of SBI Capital Markets Limited, which was still awaited.  The th seventh meeting of the CoC was held on 26  September, 2017 in which various options were deliberated but the discussion th remained inconclusive. In the eighth CoC meeting, held on 16 October,   2017,   it   was   agreed   that   the   resolution   plan submitted   by   the   corporate   debtor   should   provide   for monitoring and supervision by the resolution professional, in case the plan was approved by the CoC. The Indian Bank, which had 22.33% of voting power, conveyed its disapproval to the   proposed   resolution   plan.   JMFARC   Limited,   having 12.39% of voting power, had already rejected the resolution th plan in the previous meeting held on 26   September, 2017. Both   these   banks,   however,   agreed   to   reconsider   the resolution plan if a portion of the sustainable debt was to be increased. The corporate debtor was asked to submit a fresh One Time Settlement (OTS) proposal through email to all the bankers for consideration. Accordingly, the corporate debtor 7 th sent   an   email   on   18   October,   2017,   with   another   OTS scheme   proposal   as   an   alternative   to   the   resolution   plan already   submitted.   The   corporate   debtor   offered   an   OTS scheme proposal of Rs.525 Crore with a structured repayment period   indicated   therein.   In   response,   the   Indian   Bank, th through an email sent on 25  October, 2017, called upon the corporate debtor to file an OTS scheme proposal for 600 Crore. After interacting with the  bankers, a counter proposal was given by the corporate debtor which was eventually considered th th in   the   9   CoC   meeting   held   on   27   October,   2017.   The th proposal submitted by the corporate debtor on 26   October, 2017, was approved by the members of the CoC having only 55.73% voting share namely Indian Bank, JM Financial Asset Reconstruction Co. Ltd., Allahabad Bank and Andhra Bank. The   Indian   Overseas   Bank   having   voting   share   of   15.15%, rejected the resolution proposal and cited reasons through its th letter dated 27   October, 2017. Three other Banks, namely Oriental Bank of Commerce, Central Bank of India and Bank of Maharashtra, having 29.12% voting share, expressed that 8 they remained open, awaiting in­principle approval from their th respective sanctioning authority. Eventually, on 30  October, 2017,   Oriental   Bank   of   Commerce,   having   10.94%   voting share, sent an email conveying their “in­principle approval” to the  proposed resolution plan qua revised OTS scheme and that their final approval would be subject to similar approvals from the co­lenders. On the same day, Bank of Maharashtra, having 6.36% voting share, conveyed that they were open to consider   the   revised   resolution   plan.   The   Central   Bank   of India, having 11.82% voting share, conveyed its disapproval to th the revised resolution plan. Resultantly, as on 30   October, 2017,   the   voting   share   of   consenting   Banks   expressly approving the proposed resolution plan was only 66.67% and the   voting   share   of   dissenting   lender   Banks   was   26.97%. Maharashtra Bank, having 6.36% voting share, had not either approved, rejected or abstained from voting but had conveyed that they remained open to consider the resolution plan. The fact remains that the proposed resolution plan did not garner approval of not less than 75% of voting share of the financial 9 creditors   until   the   resolution   professional   (IRP)   filed   an affidavit before the adjudicating authority (NCLT Hyderabad) rd th on 3  November, 2017, submitting the outcome of the 9  CoC meeting.   The   Managing   Director   of   the   corporate   debtor (KS&PIPL) appeared before the adjudicating authority (NCLT) th th on   6   November,   2017,   and   also   filed   a   memo   on   17 November, 2017,   inter alia   submitting that for the financial creditor who chose not to participate in the voting, the votes and   the   majority   be   counted   without   their   vote.   In   that eventuality, the percentage of financial creditors who chose to participate and who approved of the resolution plan would work out to 78.63% and therefore, it can be assumed that the resolution  plan   has   been   approved   by   the   CoC.   The   NCLT th Hyderabad   vide   judgment   dated   27   November,   2017, eventually, allowed the petition filed by the corporate debtor and   approved   the   resolution   plan/revised   OTS   scheme,   as submitted by the resolution professional vide affidavit dated rd 3  November, 2017, and further declared that the moratorium th imposed on 10  February, 2017, ceased to have effect from the 10 date of receipt of copy of the order. A further direction came to be   issued   that   the   corporate   debtor   shall   reinstate   all   the employees who were on the rolls of company. Aggrieved by the said decision, three financial creditors who were part of the CoC, namely Indian Overseas Bank, Central Bank of India and Bank of Maharashtra filed appeals under Section 61 before the NCLAT   questioning   the   authority   of   NCLT   Hyderabad,   to approve of the resolution plan, despite the fact that the same did not receive approval of not less than 75% of voting share of financial   creditors.   The   Managing   Director   of   the   corporate debtor also filed an independent appeal under Section 61 of the I&B Code with reference to the observations made by the NCLT   Hyderabad   regarding   the   corporate   guarantee   to   be proceeded   with.   As   aforesaid,   these   appeals   were   heard together   along   with   appeals   concerning   another   corporate debtor, namely IIL and came to be disposed of by the common th impugned judgment dated 6  September, 2018, wherein it has been held that approval to the proposed resolution plan by a vote   of   not  less   than   75%  of   voting   share   of   the   financial 11 creditors   was   mandatory   and   it   was   not   open   to   the adjudicating authority to disregard the mandate of the CoC by adopting   a  convoluted   approach.   Against   this   decision,  the Managing Director of the corporate debtor, namely (KS&PIPL) has filed a civil appeal under Section 62 of the I&B Code in this Court, being Civil Appeal No.10673 of 2018.   8. The second set of appeals pertain to the corporate debtor­ IIL, being Civil Appeal No.10719 of 2018 filed by the promoter of the corporate debtor who holds 21.82% shares and was the erstwhile Chairman and Managing Director of the company. Civil Appeal No.10971 of 2018 is filed by the workers’ union of the   same   corporate   debtor,   namely,   Innoventive   Industries Kamgar Sanghathana. The workers’ union has filed another appeal  arising   from   SLP   (C)  No.29181   of   2018   against  the th judgment and order dated 24  September, 2018 passed by the High   Court   of   Judicature   at   Bombay   in   Writ   Petition   (C) No.136   of   2018,   filed   by   them   to   challenge   the   judgment rd th passed by the NCLT Mumbai dated 23   November, 2017/8 December, 2017, and for directing the Union of India to revive 12 the   corporate   debtor   (IIL)   and   save   it   from   liquidation   by dispensing with the 8% shortfall for touching the criteria of 75% of consent of CoC for the approval of revival as per the provisions of the I&B Code. The High Court rejected the writ petition filed by the workers’ union on the ground that they had an alternative and efficacious remedy against the decision of  the   Tribunal.   In  other  words,  the   Special  Leave  Petition primarily questions the decision of rejection of the proposed resolution plan in respect of the corporate debtor (IIL).  9. As regards the corporate debtor (IIL), the relevant facts are as follows. The said corporate debtor had suffered losses. As   a   result,   it   had   proposed   to   its   lender   Bankers   for Corporate Debt Restructuring (for short “ CDR ”). The company was   referred   to   CDR   in   September,   2013   by   19   banking entities and it invited a consortium, led by Central Bank of India. The lenders’ forum approved the restructuring plan of th the   company   on   24   June,   2014.   ICICI   Bank   filed   an Insolvency and Bankruptcy application under the I&B Code against the corporate debtor (IIL) in December 2016. That was 13 admitted   by   the   NCLT   Mumbai,   being   the   adjudicating th authority, on 17  January, 2017. An IRP was appointed and a moratorium was declared. The said corporate debtor asserts that despite the pendency of applications, the company had achieved a turnover of Rs.337 Crore upto March 2017, with operational   revenues   of   Rs.125   Crore   during   the   relevant period till September 2017. The total indirect tax paid by the company   is   approximately   Rs.8.27   Crore   during   the   same period.   Be   that   as   it   may,   consequent   to   the   order   of   the th adjudicating authority (NCLT) dated 17   January, 2017, the th first CoC meeting was held on 15  February, 2017 wherein the appointment of IRP was confirmed. Eventually, in the sixth th CoC meeting held on 19   June, 2017, it was unanimously th resolved  to  extend  the insolvency  resolution period  till 14 October,   2017.   The   IRP   then   approached   27   parties   (16 prospective   financial   investors   and   11   prospective   strategic investors) out of which 16 parties (11 financial investors and 6 strategic   investors)   showed   interest   in   the   company.   After screening of the proposed resolution applicants, the subject 14 rd resolution plan was submitted to the IRP on 3   September, 2017, which was taken up for consideration by the CoC in its th meeting on 4  October, 2017, by e­voting. Financial creditors holding 66.57% voting share voted in favour of approving the proposed   resolution   plan   whereas   the   dissenting   financial creditors,   having   33.43%   voting   share,   voted   against   the proposed resolution plan. Resultantly, the proposed resolution plan was not approved or came to be rejected for want of support of the requisite percent of financial creditors, having voting   share   of   not   less   than   75%.   The   IRP   then   filed   an th application   on   12   October,   2017,   before   the   adjudicating authority   (NCLT)   praying   for   initiating   liquidating   process against   IIL.   The   NCLT   Mumbai,   after   considering   the submissions of both sides, by order pronounced in court on rd th 23   November, 2017 and delivered on 8   December, 2017, directed   initiation   of   liquidation   proceeding   against   the corporate debtor (IIL). The appellant in the leading appeal of the second set of appeals, being the former Chairman and Managing Director of the corporate debtor (IIL) had filed an 15 interim application before the NCLT Mumbai praying that the dissenting financial creditors be directed to disclose on oath reasons/basis for, or the decision making process involved in, voting against the resolution plan and a declaration that the dissenting financial creditors voted with malicious intention of liquidation and hence, their votes ought to be ignored. The workers’   union   of   the   corporate   debtor   (IIL)   had   filed   an interim application, opposing liquidation of the company. The resolution applicant had also filed an application to allow it to submit a revised resolution plan and to invite a fresh vote thereon albeit after the time earlier envisaged for obtaining shareholders   approval.   According   to   the   appellants   in   the second set of appeals, NCLT did not call for the response of the opposite parties on the concerned applications and instead proceeded   to   pass   the   impugned   order   rejecting   the applications and directing initiation of liquidation proceeding against the corporate debtor. The appellants in the leading appeal concerning the corporate debtor (IIL) filed an appeal before the NCLAT against the decision of the NCLT, Mumbai. 16 This   appeal   was   heard   along   with   the   appeals   concerning another corporate debtor (KS&PIPL) and disposed of together by   the   NCLAT   as   common   issue   was   involved   in   all   these appeals. As aforesaid, by the impugned judgment NCLAT has held that the requirement of approval of resolution plan by vote of not less than 75% of voting share of financial creditors was mandatory and hence dismissed the appeal preferred by the appellant. Aggrieved, the said appellant and the workers’ union of KS&PIPL have filed appeals against the said decision of NCLAT and the High Court respectively.    Mr. C.U. Singh, learned senior counsel appearing for the 10. appellant   in   the   case   of   corporate   debtor   KS&PIPL   had canvassed two­pronged submissions. The first is on the basis of the unamended provisions as applicable on the date of the resolution passed by the CoC in October, 2017. It is urged that on a fair interpretation of those provisions, it ought to be held that the same were not mandatory. Even assuming that the same were mandatory, considering the fact that a significant section of the financial creditors had abstained from voting on 17 th 27  October, 2017, their votes were required to be ignored for the purpose of computing the required percentage of voting share. In that case, it would work out to be more than 75%. In that,   the   percentage   of   votes   for   approval   (55.73%)   of   the resolution proposal and the voting share rejecting the proposal was only 15.15%. Taking these votes only, the proportionate percentage of the voting share for approval will obviously be more than 75% (i.e. approximately 78.63%). Thus understood, the   NCLT   Mumbai   ought   to   have   approved   the   resolution proposal. The second limb of the argument is that the NCLAT, th which had decided the appeals on 6  September, 2018, ought to have taken into account the amendments brought into force rd w.e.f.   23   November,   2017   and   followed   by   another th amendment brought into force w.e.f. 6   June, 2018 to the provisions of I&B Code and including the amendment to the Regulations of the Insolvency and Bankruptcy Board of India (Insolvency   Resolution   Process   for   Corporate   Persons) th Regulations, 2016 brought into force from 4  July, 2018. For, the same came into force during the pendency of the appeals. 18 Further, the purport of the said amendments posit that the CoC   should   be   objective   in   its   approach   and   consider   the feasibility and viability of the resolution proposal and must assign reasons for approval or rejection of the proposal, as the case may be. Additionally, the requirement of percentage of votes of the financial creditors stood reduced to 66% of voting share which, in the present case, has been fulfilled on account of the approval given by 55.73% in the meeting convened on th 27   October,   2017,   and   followed   by   in­principle   approval th conveyed via email on 30  October, 2017, by Oriental Bank of Commerce,   having   10.94%   voting   power.   In   effect,   this argument proceeds on the assumption that the amendments rd to the Code brought into force w.e.f. 23  November, 2017 and th in particular on 6  June, 2018, would have retroactive effect, as   is   clear   from   the   legislative   intent   behind   the   said amendments. The said amendments are made applicable from the inception and to pending proceedings also because it is to substitute the original provision as was applicable on the date th of   the   resolution   dated   27   October,   2017,   and   filing   of 19 affidavit by IRP before the adjudicating authority. To buttress this argument, reliance has been placed on the exposition in 1 , Gottumukkala Venkata Krishamraju Vs. Union of India 2 Government of India Vs. India Tobacco Association   and 3 .   In   support   of   the Zile   Singh   Vs.   State   of   Haryana argument   that   the   amendment   to   Section   30(4)   applied   to pending   proceedings,   reliance   has   been   placed   on   the judgment in  Mithilesh Kumari & Another Vs. Prem Behari 4 ,  Khare Dahiben (Widow of Ranchnodji Jivanji) & Ors. Vs. 5 Vasanji Kevalbhai (dead) & Others . Reliance is also placed on the decision in   B.K. Educational Services Private Ltd. 6 Vs. Parag Gupta & Associates   which had considered the applicability of Section 238­A inserted by way of  the same th amendment Act in the I&B Code w.e.f. 6  June, 2018. In this decision, the court held that the legislative intent behind the amendment  was   to  apply   the   Limitation   Act  from   the   very 1  (2018) SCC Online SC 1386­ Paragraphs 13­16.  2  (2005) 7 SCC 396 Paragraphs 14­16, 24, 26&28.  3  (2004) 8 SCC 1 Paragraphs 14­16.  4  (1989) 2 SCC 95. Paragraph 24 and also see paragraphs 1, 23 and 25. 5  (1995) Supp. 2 SCC 295. Paragraph 13 and also see Paragraphs 12, 14 and 15.  6  (2018) SCC Online SC 1921 Paragraph 45. 20 beginning to NCLT and NCLAT while deciding the applications filed under Sections 7 and 9 of the I&B Code and the appeals therefrom. Reliance is also placed on the decision in   State 7 Bank   of   India   Vs.   Ramakrishnan   which   had   dealt   with amendment by way of substitution to Section­14(3) of the I&B Code   concerning   surety   in   a   contract   of   guarantee   for   a corporate   debtor.   The   court   held   that   the   amendment   was retrospective.   Reliance   is   also   placed   on   the   decision   in 8 Rustom & Hornby (I) Ltd. Vs. T.B. Kadom   in which this court   gave   retrospective   construction   to   Section   2­A   of  the Industrial Disputes Act, 1947 and also in  Bharat Singh Vs. Management   of   New   Delhi   Tuberculosis   Centre,   New 9  to the same effect. The thrust of the argument is that Delhi the object of the I&B Code is resolution rather than liquidation as also the maximization of value of assets of such persons, to promote entrepreneurship. To buttress this argument, reliance is also placed on the report of the Insolvency Law Committee 7  (2018) SCC Online SC 963. Paragraph 34.  8  (1976) 3 SCC 71. Paragraph 6.  9  (1986) 2 SCC 614. Paragraphs 2, 5­6, 10­14. 21 in March 2018. Paragraph 11.6 therein states that in order to further   the   stated   object   of   the   I&B   Code   to   promote resolution, the  voting  share for approval of  resolution plan may be reduced to 66%. It is submitted that this should have been taken into account by the NCLAT in reference to the amended provisions brought into force during the pendency of the appeal before it. It is also contended that the adjudicating authority (NCLT) as well as the appellate authority (NCLAT), while approving or rejecting the resolution plan, is duty bound to exercise a judicious mind and be alive to the facts and circumstances   of   the   specific   case   before   it  and   the   socio­ economic benefit considering the favourable opinion noted by the   resolution   professional   in   his   affidavit,   that   there   was every possibility of reviving the corporate debtor. Even as per the   report   submitted   by   M/s.   Atlas   Financial   Research   & Consulting   Private   Limited   regarding   a   thorough   Techno Economic Viability study conducted in respect of the corporate debtor (KS&PIPL), it has been noted that the company was technically   feasible   and   economically   viable.   The   corporate 22 debtor   was   facing   a   financial   crisis   due   to   abrupt   and unilateral stoppage of operations in the working capital loan account   and   the   proposed   resolution   plan   fulfilled   all   the eligibility criteria for its approval under the provisions of the I&B   Code.   Furthermore,   the   dissenting   financial   creditors having failed to offer any reason whatsoever for rejecting the resolution proposal, it must follow that they did not do so in good faith but with malicious intent, warranting intervention by the adjudicating authority and the appellate authority.  11. Mr. A.M. Singhvi, learned Senior Counsel appearing for the   appellant   concerning   the   corporate   debtor   (IIL)   would submit that the CoC, being the custodian of public interest, is under a statutory duty to exercise its power under Section 30(4)  of   the   I&B   Code  reasonably   and  fairly.   Section  30(4) posits an obligation upon the CoC to adopt a resolution plan which is   ex facie   more viable than liquidation. According to him, the amendments to Section 30(4) in particular brought rd into   force   w.e.f.   23   November,   2017   are   only declaratory/clarificatory   of   the   law   and   resultantly, 23 retrospective.   He   submits   that   giving   reasons   for   the   view expressed   on   the   resolution   plan,   be   it   for   approval   or rejection, is the quintessence to fulfill the requirement of a reasonable and fair approach of the CoC. Reasons so given, would demonstrate whether it is a bonafide or malicious act of the   financial   creditors.   That   has   now   been   clarified   and restated by the amending regulation 39(3) which has come th into   force   w.e.f.   4   July,   2018.   Being   a   clarificatory amendment, the same would take effect retrospectively and is applicable even to pending proceedings. It is then contended that if no reason is assigned or forthcoming, the court is not powerless   to   strike   down   the   exercise   of   power   by   the concerned financial creditor if it was possible to infer from the circumstances emanating from the record that the exercise of such   power   was   wrongly   exercised.   To   buttress   this submission   reliance   was   placed   upon   Mardia   Chemicals 10 limited and Others Vs. Union of India and Others  which had read the requirement of fairness and reasonableness into 10  (2004) 4 SCC 311, paragraph 45. 24 Section   13   of   the   SARFAESI   Act.   The   court   declared   that reasons must be given and communicated. This “reading in” of the principle of fairness and reasonableness, was eventually codified   in   the   form   of   Section   13(3­A)   of   that   Act.   Such interpretation   was   inexorable   in   respect   of   provisions   as draconian   as   Section   30(4),   resulting   in   the   inevitable consequence   of   liquidation   of   the   corporate   debtor.   The provisions of the I&B Code must be so construed as not to be financial   creditor   centric   but   to   be   an   inclusive   approach where all stakeholders’ interests are balanced and particularly for exploring the possibility of revival of the corporate debtor and maximisation of the value of assets. In the present case, contends   learned   counsel,   the   only   plea   taken   by   the dissenting financial creditors before the adjudicating authority (NCLT), was that they had taken a commercial decision and it was not open to judicial scrutiny. Even if it is a commercial decision, contends learned counsel, it must fulfill the test of a reasonable   and   fair   approach   to   be   supported   by   tangible reasons. In the absence of reasons, the adjudicating authority 25 (NCLT) must exercise its jurisdiction to ascertain whether the exercise of power by the CoC is reasonable and in conformity with the purpose of the Code. If the resolution plan is  ex facie viable   and   yet   the   dissenting   financial   creditors   reject   the same, such exercise of power would be subversive of the policy of   the   Code,   requiring   intervention   by   the   adjudicating authority (NCLT). Whereas, such a case would imply a duty on the CoC to exercise its power to approve the plan. To counter the defence of the dissenting financial creditors regarding a commercial decision, reliance was placed on   Padfield and 11 Others Vs. Minister of Agriculture, Fisheries and Food and   Dhampur   Sugar   Mills   Ltd.   Vs.   State   of   U.P.   and 12 Others .  Learned counsel contends that abdication of duty by the CoC to consider the feasibility and viability projected in the proposed resolution plan would be fatal. It would be a case of non   application   of   mind   by   the   CoC,   if   not   a   malicious approach in rejection of the proposed resolution plan. The test of limits of judicial review, as expounded in  Tata Cellular Vs. 11  (1968) 2 WLR 924 12  (2007) 8 SCC 338 26 13 Union of India  ought to be invoked to rein in the unbridled exercise of power by the CoC. The Tribunal could certainly discard the view of the dissenting financial creditors if it was satisfied that such a decision could not be reached by any reasonable   and   prudent   person.   It   is   also   possible   for   the adjudicating   authority   (NCLT)   to   intervene   if   the circumstances suggest that the decision of dissenting financial creditors   was   the   outcome   of   abuse   of   power   or   being irrational and unreasonable. Reliance is also placed on the decision in  Union of India and Another Vs. Cynamide India 14 Ltd.   and   Another   and   Shri   Sitaram   Sugar   Company 15 . As Limited and Another Vs. Union of India and Others th regards   the   amendment   brought   into   effect   from   23 November,   2017   to   Section   30(4)   of   the   I&B   Code,   it   is contended   that   the   same   must   be   construed   as   only clarificatory   and   resultantly,   be   given   retrospective   effect. Inasmuch as the discretion given to the constituents of CoC, namely the financial creditors under Section 30(4) of the I&B 13  (1996) 6 SCC 651 Paragraphs­73 and 77.  14  (1987) 2 SCC 720 Paragraph 4 15  (1990) 3 SCC 223 Paragraphs ­ 47­49, 51­53, 57­58. 27 Code is required to be exercised in a just manner and by giving   due   regard   to   the   feasibility   and   viability   of   a   plan proposed for revival of the corporate debtor. There is nothing else   relevant   for   discharging   the   statutory   obligation   of approving   or   rejecting   the   proposed   resolution   plan.   With regard to the second amendment to Section 30(4) of the I&B th Code which came into effect from 6  June, 2018, reducing the voting threshold from 75% to 66%, learned counsel contends that even the same operates from the time the section was brought on the statute book. For, the legislature consciously lowered the threshold requirement to 66%. It was to infuse more flexibility in the resolution processes and to maximise the effort for revival of the corporate debtor in the larger public interests.   The   intention   of   the   Parliament   was   to   cure   the mischief that the high threshold was causing; and by reducing it, Parliament intended to encourage revival of the corporate debtor   and   maximisation   of   the   value   of   assets   and   to discourage liquidation resulting in closure of the functioning company on which many stakeholders depended, such as its 28 workers.   With   regard   to   the   objection   to   the   locus   of   the appellant being the former Chairman and Managing Director of the corporate debtor, it is contended that the same is raised for the first time, and in any case, cannot be countenanced in view of the express   provision contained in Section 61 of the I&B   Code   and   moreso   because   the   appellant   had   initiated proceedings by filing an application before the adjudicating authority   (NCLT)  and   the   appellant,   being   the   shareholder, had reason to insist for revival of the corporate debtor instead of its liquidation. As regards the objection about the eligibility of the appellant as a person acting jointly or in concert with the corporate debtor in terms of Section 29A of the I&B Code, it is contended that even this objection was being taken for the first time. Notably, Section 29A of the I&B Code came into rd force only from 23  November, 2017, and it did not exist when the resolution plan was considered by the CoC. Further, the scope of appeal preferred by the appellant was to call upon the adjudicating   authority   to   interfere   with   the   unreasonable rejection   of   the   resolution   plan   by   the   dissenting   financial 29 creditors and  not to propound an independent plan of the appellant.   Thus   understood,   Section   29A   of   the   I&B   Code would have no application and in any case, if the proposed resolution plan is to be taken forward, the appellant has no causal   connection   with   the   resolution   applicant.   Learned counsel submits that the appeal be allowed and the matter be restored to the file of the adjudicating authority (NCLT) for reconsideration of the proposed resolution plan afresh. 12. Mr. Colin Gonsalves, learned Senior Counsel appearing for   the   workers’   union   concerning   corporate   debtor   (IIL) submits that the rejection of the plan would have a direct impact   on   the   workers   engaged   by   the   corporate   debtor. According   to   him,   the   resolution   plan   manifests   that   the company is a viable company and all efforts should be made to revive   the   company   and   not   to   shove   it   into   liquidation because of the whims and fancies of the minority financial creditors or, for that matter, in the guise of their commercial wisdom.   Reliance   is   placed   on   United   Bank   of   India, 30 16 Calcutta Vs. Abhijit Tea Co. Pvt. Ltd. and Others   and Karan Singh and Others Vs. Bhagwan Singh (Dead) By 17 Lrs. And Others   and additionally, on the decision of the NCLAT   in   the   case   of   another   corporate   debtor   (Alok Employees Benefit and Welfare Trust) in Company Appeal (AT) th (Insolvency) No.344 of 2018 decided on 29  November, 2018. He   had   also   invited   our   attention   to   the   chart   given   in Economic Survey 2017­18 Volume 2, to contend that there will be hardly any impact if this Court was to remit the case for reconsideration on the basis of the amended provisions by the adjudicating authority (NCLT) and especially because there is ample material on record to indicate that the corporate debtor (IIL) is a viable company and needs to be revived and not liquidated.   13. On the other hand, Mr. Shyam Divan, learned Senior Counsel   and   Ms.   Pragya   Baghel   countered   the   above submissions   and   supported   the   conclusion   reached   by   the NCLAT that the requirement specified in Section 30(4) of the 16  (2000) 7 SCC 357 Paragraph 20. 17  (1996) 7 SCC 559 Paragraph 7.  31 I&B Code is mandatory. They submit that the I&B Code has been enacted after the experience of the earlier dispensations. There has been paradigm shift in adopting the new regime regarding the  timelines to be observed by all concerned at every stage as predicated in the Code. Be it for the resolution process   or   liquidation   process.   Both   these   processes   are intended   to   be   disposed   of   speedily   and   in   a   time­bound manner. The initial time limit provided to revive the company is 180 days from the date of admission of the petition and extendable by 90 days. The outer limit for resolution process has been specified as 270 days and if the resolution plan is not approved by the CoC with requisite number of votes of the financial creditors (not less than of 75%), then there is no other option but to order liquidation. That is the inevitable consequence of failure to approve the resolution plan within the specified time. The adjudicating authority (NCLT) would have no other option. Further, on presentation of the rejected resolution plan, it is not open to the adjudicating authority (NCLT)   to   enquire   into   the   justness   of   the   reason   or   the 32 commercial   decision   taken   by   the   financial   creditors   to approve or not to approve the proposed resolution plan. There is complete autonomy regarding the commercial decision or wisdom of the financial creditors. That cannot be questioned by the adjudicating authority (NCLT). Whereas, the judicial review is circumscribed to the grounds specified in the Act itself, which is a self­contained Code. The legislative intent makes it amply clear that the Parliament was conscious about the fact that some business entities will fail and cannot be revived within the specified time but that cannot suppress the need for addressing the serious concern of financial creditors due to increasing financial pressure on them because of non­ performing assets of the corporate debtor. The promoters have no divine right to continue to manage such corporate debtor. The   I&B   Code   predicates   the   necessity   of   interest   in   the management of such corporate debtors being handed over to professionals during the moratorium period so as to make a sincere effort to revive the company within the specified time. Our   attention   was   invited   to   Bankruptcy   Law   Reforms 33 th Committee Report dated 4   November, 2015 and Insolvency th Law Committee Report dated 26  March, 2018, to buttress the argument about the legislative intent behind the enactment of the I&B Code and the concerned amendment. Reliance has been placed on Innoventive Industries Ltd. (supra), which had adverted to the legislative intent behind the I&B Code.  14. Mr.   Divan,   appearing   for   ICICI   Bank   in   the   case   of corporate   debtor   (IIL),   submits   that   there   was   only   one resolution   plan.   Neither   has   the   resolution   applicant challenged the decision of the adjudicating authority (NCLT) nor has it been made party in the appeal. The outstanding amount   payable   by   the   corporate   debtor   (IIL)   is   around Rs.1435   Crore.   He   submits   that   the   resolution   plan   is   a complex   document   unlike   a   bid   or   tender   document.   The professionals associated with the dissenting financial creditors have analysed the same and were of the considered opinion that it is not a feasible and achievable target ­ rather it is a speculative   proposal.   The   dissenting   financial   creditors exercised their commercial wisdom after taking into account 34 all the relevant aspects. It is not open to undertake scrutiny of that decision of the dissenting financial creditors. Neither can the IRP nor the adjudicating authority (NCLT) be allowed to sit over   the   same   as   a   court   of   appeal.   The   decision   of   the dissenting   financial   creditors   reckons   various   aspects including the confidence about the capacity of the resolution applicant to translate the projected plan into reality as per the timelines   specified   and   the   feasibility   and   viability   of   the proposal and revival of the company in question. He took us through the relevant provisions including amended provisions and contended that the purpose and intent underlying the amendment   was   to   give   prospective   effect   thereto.   He submitted that the appeal filed by the former Chairman and Managing   Director   of   the   corporate   debtor   (IIL)   was   not maintainable also because the said appellant has no locus. He submitted that the appellant was acting in concert with the resolution   applicant   and   for   which   the   appellant   must   be called upon to first deposit 100% of the dues. Our attention is invited to the recent decision in  Arcelormittal India Private 35 18 Limited Vs. Satish Kumar Gupta and Others . He submits that the Court has noticed the necessity of observing timelines by all concerned ­ be it at the stage of resolution process or liquidation process ­ in terms of the mandate in the I&B Code. The   amendments   cannot   be   construed   otherwise   so   as   to render the legislative intent otiose. He submits that, in law, there   is   a   presumption   of   prospective application   of   the   amended provisions. There is no express provision ordaining retrospective   application   of   the   amended   provisions.   The amended provisions unambiguously predicate that the same would come into force with effect from the stated date. In the present   case,   the   timeline   for   completion   of   the   resolution th process expired on 14  November, 2017, and for which reason the amended provision lowering the voting share to 66% will be of no avail. As regards the amendment to Regulation 39, th that has come into force w.e.f. 4   July, 2018, and obviously would   have   prospective   application.   In   any   case,   non­ disclosure of the reason by the dissenting financial creditors, would   not   vitiate   the   concluded   cause   of   action   upon 18  (2018) SCCOnline 1733, Paragraphs 64, 78, 83 and 88 36 exercising the vote to reject the proposed resolution plan. That position   cannot   be   unsettled   on   the   basis   of   the   amended regulation. Learned counsel has placed reliance on the case of Karnataka   State   Industrial   Investment   &   Development 19 Corpn.   Ltd.   Vs.   Cavalet   India   Ltd.   and   Others. .   As regards the concern expressed by the workers union of the corporate debtor (IIL), it is submitted that the workmen would get the highest priority in terms of Section 53 of the I&B Code. Moreover,   the   fact   that   the   liquidation   process   has   been initiated in respect of the company does not mean that the possibility of sale of the company as a running concern has been completely ruled out. Thus, the interests of the workers engaged by the corporate debtor will be taken care of as per the   statutory   command.   The   sum   and   substance   of   the argument   is   that   the   adjudicating   authority   (NCLT)   was justified in rejecting the applications filed by the appellants and   recorded   the   factum   of   rejection   of   the   proposed resolution plan with the inevitable direction to initiate process 19  (2005) 4 SCC 456 Paragraphs 13 and 19 37 for liquidation of the company under Section 33 of the I&B Code. In that view of the matter, no interference is warranted with the impugned decision of the NCLAT.  Ms. Pragya Baghel, appearing for Indian Overseas Bank 15. in the case of corporate debtor (KS&PIPL), having voting share of 15.15% and being one of the dissenting financial creditors, would submit that the appellant was disqualified to appeal and   that   his   appeal   before   NCLAT   was   limited   to   the observation regarding the personal guarantee as noted by the NCLT. The fact remains that the resolution plan put to vote did not garner support of the requisite percentage of financial creditors   to  the   extent  of   not  less   than  75%  of   the   voting share.   The   provisions   as   couched   in  the   I&B   Code   do not permit   computation   of   the   voting   share   percentage   by excluding the votes of financial creditors who had abstained. Whereas, there is express provision to the contrary, making it amply clear that the votes of the financial creditors who had abstained from voting must be computed along with the votes rejecting   the   resolution   plan,   as   being   dissenting   financial 38 creditors. Any other interpretation would result in re­writing Section 30(4) and the regulations framed under the I&B Code, if not doing violence to the legislative intent. She has placed reliance on the decisions of  S.L. Srinivasa Jute Twine Mills 20 (P)   Ltd.   Vs.   Union   of   India   and   Another   and   Rajeev 21 .   As   regards   the Chaudhary   Vs.   State   (NCT)   of   Delhi argument   of   retrospective   application   of   the   amended provisions, in particular, reducing the voting share from 75% to 66%, learned counsel has placed reliance on the decision of this   Court   in   Hitendra   Vishnu   Thakur   and   Others   Vs. 22 State   of   Maharashtra   and   Others .   The   appellant   and respondents 1­3 & 5­8 in C.A. No.10673 of 2018 and appellant and respondents 2 & 20 in C.A. No.10719 of 2018 have filed written submissions through their counsels, elaborating the above points.  16. Ms.   Prabha   Swami,   appearing   for   the   resolution applicant (Suyash Outsourcing Pvt. Ltd.), has submitted that 20  (2006) 2 SCC 740. Paragraphs 13­19. 21  (2001) 5 SCC 34 Paragraphs. 3 and 4. 22  (1994) 4 SCC 602 Paragraph 26. 39 the resolution plan was approved on certain conditions and the resolution applicant assures to abide by those conditions. Further, as per the liberty given to the resolution applicant, appropriate   affidavit   has   now   been   filed   to   place   that assurance on record.   17. Ms. Mahima  Singh,  learned  counsel appearing for the Official Liquidator in the case of corporate debtor (IIL), had sought   liberty   to   place   on   record   certain   subsequent developments   which   may   have   bearing   on   the   concerned rd appeals. That affidavit dated 23   November, 2018, has also been filed and is allowed to be taken on record.  18. Having heard learned counsel for the parties, the moot question is about the sequel of the approval of the resolution plan by the CoC of the respective corporate debtor, namely KS&PIPL and IIL, by a vote of less than seventy five percent of voting   share   of   the   financial   creditors;   and   about   the correctness   of   the   view   taken   by   the   NCLAT   that   the percentage of voting share of the financial creditors specified in Section 30(4) of the I&B Code is mandatory. Further, is it 40 open   to   the   adjudicating   authority/appellate   authority   to reckon any other factor (other than specified in Sections 30(2) or 61(3) of the I&B Code as the case may be) which, according to the resolution applicant and the stakeholders supporting the resolution plan, may be relevant?  19. This   Court   in   its   recent   decisions   has   elaborately adverted to the legislative history and delineated the broad contours of the provisions of the I&B Code. The latest being the   case   of   (supra)   followed   by   Arcelormittal   B.K. Educational   (supra)   and   Innoventive   Industries   Limited 23 .  In the present case, however, Vs. ICICI  Bank and Another our focus must be on the dispensation governing the process of approval or rejection of resolution plan by the CoC. The CoC is called upon to consider the resolution plan under Section 30(4) of the I&B Code after it is verified and vetted by the resolution   professional   as   being   compliant   with   all   the statutory requirements specified in Section 30(2). 23   (2018) 1 SCC 407 41 20.   The CoC is constituted as per Section 21 of the I&B Code, which consists of financial creditors. The term ‘financial creditor’ has been defined in Section 5(7) of the I&B Code to mean   any   person   to   whom   a   financial   debt   is   owed   and includes   a   person   to   whom   such   debt   has   been   legally assigned or transferred to. Be it noted that the process of insolvency   resolution   and   liquidation   concerning   corporate debtors   has   been   codified   in   Part   II   of   the   I&B   Code, comprising of seven Chapters. Chapter I predicates that Part II shall   apply   in   matters   relating   to   the   insolvency   and liquidation of corporate debtor where the minimum amount of default is Rs.1,00,000/­.  Section 5 in Chapter I is a dictionary clause specific to Part II of the Code. Chapter II deals with the gamut of procedure to be followed for the corporate insolvency resolution process. For dealing with the issue on hand, the provisions contained in Chapter II will be significant. From the scheme of the provisions, it is clear that the provisions in Part II   of   the   Code   are   self­contained   code,   providing   for   the procedure for consideration of the resolution plan by the CoC.  42 21. The stage at which the dispute concerning the respective corporate   debtors   (KS&PIPL   and   IIL)   had   reached   the adjudicating authority (NCLT) is ascribable to Section 30(4) of the I&B Code, which, at the relevant time in October 2017, read thus: “ The committee of creditors may approve a resolution 30(4)­ plan by a vote of not less than seventy five per cent of voting share of the financial creditors.” If   the   CoC   had   approved   the   resolution   plan   by   requisite percent of voting share, then as per Section 30(6) of the I&B Code, it is imperative for the resolution professional to submit the same to the adjudicating authority (NCLT). On receipt of such a proposal, the adjudicating authority (NCLT) is required to satisfy itself that the resolution plan as approved by CoC meets the requirements specified in Section 30(2). No more and no less. This is explicitly spelt out in Section 31 of the I&B Code, which read thus (as in October 2017):   “ 31.   Approval   of   resolution   plan. ­(1)  If the  Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub­section (4) of section 30 meets the requirements as referred to in sub­section(2) of section   30,   it   shall   by   order   approve   the   resolution   plan which   shall   be   binding   on   the   corporate   debtor   and   its 43 employees,   members,   creditors,   guarantors   and   other stakeholders involved in the resolution plan.  (2) Where the Adjudicating Authority is satisfied that the resolution   plan   does   not   confirm   to   the   requirements referred to in sub­section (1), it may, by an order, reject the resolution plan.  (3) After the order of approval under sub­section (1),­ (a)   the   moratorium   order   passed   by   the   Adjudicating Authority under section 14 shall cease to have effect; and  (b)   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.” We may also usefully refer to Section 30(2) as applicable at the relevant time. The same read thus:  “ 30. Submission of resolution plan .­ (1)  xxx xxx xxx (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   repayment   of other debts of the corporate debtor; (b) provides for the repayment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors   in   the   event   of   a   liquidation   of   the corporate debtor under section 53; (c) provides for the management of the affairs of   the   Corporate   debtor   after   approval   of   the resolution plan; (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; 44 (f) conforms to such other requirements as may be specified by the Board. xxx xxx xxx”   In   (supra), the Court, 22. Innoventive Industries Limited   after analysing the historical background in which the Code was enacted, opined that one of the most important objectives of the Code was to bring the insolvency law in India under a single, unified umbrella with the object of speeding up the insolvency   process.   As   regards   the   process   regarding submission of resolution plan and, in particular, in reference to Section 30, the Court observed as follows:  “33.  Under   Section   30,   any   person   who   is   interested   in putting the corporate body back on its feet may submit a resolution   plan   to   the   resolution   professional,   which   is prepared on the basis of an information memorandum. This plan   must   provide   for   payment   of   insolvency   resolution process costs, management of the affairs of the corporate debtor after approval of the plan, and implementation and supervision   of   the   plan.   It   is   only   when   such   plan   is approved by a vote of not less than 75% of the voting share   of   the   financial   creditors   and   the   adjudicating authority is satisfied that the plan, as approved, meets the   statutory   requirements   mentioned   in   Section   30, that   it   ultimately   approves   such   plan,   which   is   then binding on the corporate debtor as well as its employees, members, creditors, guarantors and other stakeholders. Importantly, and this is a major departure from previous legislation   on   the   subject,   the   moment   the   adjudicating authority   approves   the   resolution   plan,   the   moratorium 45 order passed by the authority under Section 14 shall cease to have effect. The scheme of the Code, therefore, is to make an attempt, by divesting the erstwhile management of its powers and vesting it in a professional agency, to continue the business of the corporate body as a going concern until a resolution plan is drawn up, in which event the management is handed over under the plan so that the corporate body is able to pay back its debts and get back on its feet.  All this is to be done within a period of 6 months with a maximum extension of another 90 days or else the chopper comes down and the liquidation process begins .”  (emphasis supplied) (emphasis supplied) The  Court,  however,  was  not called  upon  to deal  with the specific issue that is being considered in the present cases namely,   the   scope   of   judicial   review   by   the   adjudicatory authority in relation to the opinion expressed by the CoC on the proposal for approval of the resolution plan. 23. In   Arcelormittal   (supra),   the   Court   adverted   to   the timelines specified in the Code and the consequences thereof in paragraphs 73 and 74, which read thus:  “73. The   time   limit   for   completion   of   the   insolvency resolution process is laid down in Section 12. A period of 180 days from the date of admission of the application is given by Section 12(1). This is extendable by a maximum period of 90 46 days only if the Committee of Creditors, by a vote of 66%, votes to extend the said period, and only if the Adjudicating Authority is satisfied that such process cannot be completed within 180 days. The authority may then, by order, extend the duration of such process by a maximum period of 90 days   (see   Sections   12(2)   and   12(3)).   What   is   also   of importance is the proviso to Section 12(3) which states that any   extension   of   the   period  Under   Section   12   cannot   be granted more than once. This has to be read with the third proviso to Section 30(4), which states that the maximum period   of   30   days   mentioned   in   the   second   proviso   is allowable   as   the   only   exception   to   the   extension   of   the aforesaid period not being granted more than once. 74.  What is important to note is that a consequence is provided, in the event that the said period ends either without receipt of a resolution plan or after rejection of a resolution plan under Section 31. This consequence is provided by Section 33, which makes it clear that when either of these two contingencies occurs, the corporate debtor is required to be liquidated in the manner laid down in Chapter III. Section 12, construed in the light of the object sought to be achieved by the Code, and in the light   of   the   consequence   provided   by   Section   33, therefore,   makes   it   clear   that   the   periods   previously mentioned are mandatory and cannot be extended .” (emphasis supplied) And again, while dealing with the purport of Sections 30, 33 and 61  in paragraph 76, it is observed thus:  “76. …………………… (viii) Section 30 is an important provision in that a resolution applicant may submit a resolution plan to the Resolution Professional, who is then to examine the said plan to see that it conforms to the requirements of Section 30(2). Once this plan conforms to such requirements, the plan is then to be presented to the Committee of Creditors for its approval under   Section   30(3).   This   can   then   be   approved   by   the Committee of Creditors by a vote of not less than 66% under 47 Sub­section   (4).   What   is   important   to   note   is   that   the Committee of Creditors shall not approve a resolution plan 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. Once approved by the Committee of Creditors, the resolution   plan   is   to   be   submitted   to   the   Adjudicating Authority under Section 31 of the Code.  It is at this stage that   a   judicial   mind   is   applied   by   the   Adjudicating Authority to the resolution plan so submitted, who then, after being satisfied that the plan meets (or does not meet) the requirements mentioned in Section 30, may either approve or reject such plan. (ix) An appeal from an order approving such plan is only on   the   limited   grounds   laid   down   in   Section   61(3). However, an appeal from an order rejecting a resolution plan would also lie under Section 61. (x)   As   has   been   stated   hereinbefore,   the   liquidation process gets initiated under Section 33 if, (1) either no resolution plan is submitted within the time specified under Section 12, or a resolution plan has been rejected by the Adjudicating Authority; (2) where the Resolution Professional, before confirmation of the resolution plan, intimates the Adjudicating Authority of the decision of the Committee of Creditors to liquidate the corporate debtor; or (3) where the resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor. Any person other than the corporate debtor whose interests are prejudicially affected by such contravention may apply to the Adjudicating Authority, who   may   then   pass   a   liquidation   order   on   such application .” (emphasis supplied) 24. Notably,   the   resolution   plan   concerning   both   the corporate debtors, namely KS&PIPL and IIL was considered by the concerned CoC in October 2017, and was approved by less 48 than   75%   of   voting   share   of   the   financial   creditors.   The inevitable   consequences   thereof   are   to   treat   the   proposed resolution plan as disapproved or deemed to be rejected by the dissenting   financial   creditors.   The   expression   ‘dissenting financial   creditors,   is   defined   in   Regulation   2(1)(f)   of   The Insolvency   and   Bankruptcy   Board   of   India   (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, to   mean   the   financial   creditors   who   voted   against   the resolution plan approved by the Committee. This definition came to be amended subsequently w.e.f. 01.01.2018  to mean the financial creditors who voted against the resolution plan or abstained from voting for the resolution plan, approved by the Committee.  25. Admittedly, in the case of the corporate debtor KS&PIPL, the resolution plan, when it was put to vote in the meeting of th CoC held on 27  October, 2017, could garner approval of only 55.73% of voting share of the financial creditors and even if the   subsequent  approval  accorded  by  email  (by  10.94%) is taken into account, it did not fulfill the requisite vote of not 49 less than 75% of voting share of the financial creditors. On the other   hand,   the   resolution   plan   was   expressly   rejected   by 15.15% in the CoC meeting and later additionally by 11.82% by email. Thus, the resolution plan was expressly rejected by not less than 25% of voting share of the financial creditors. In such   a   case,   the   resolution   professional   was   under   no obligation to submit the resolution plan under Section 30(6) of the I&B Code to the adjudicating authority. Instead, it was a case   to   be   proceeded   by   the   adjudicating   authority   under Section   33(1)   of   the   I&B   Code.     Similarly,   in   the   case   of corporate debtor IIL, the resolution plan received approval of only   66.57%   of   voting   share   of   the   financial   creditors  and 33.43%   voted   against   the   resolution   plan.   This   being   the indisputable position, NCLAT opined that the resolution plan was deemed to be rejected by the CoC and the concomitant is to initiate liquidation process concerning the two corporate debtors.  According   to   the   resolution   applicant   and   the 26. stakeholders   supporting   the   concerned   resolution   plan   in 50 respect of the two corporate debtors, the stipulation in Section 30(4) of the I&B Code as applicable at the relevant time in October   2017   is   only   directory   and   not   mandatory.   This argument is founded on the expression “may” occurring in Section   30(4)   of   the   I&B   Code.   This   argument   does   not commend to us. In that, the word “may” is ascribable to the discretion of the CoC ­ to approve the resolution plan or not to approve the same. What is significant is the second part of the said provision, which stipulates the requisite threshold of “not less than seventy five percent of voting share of the financial creditors” to treat the resolution plan as duly approved by the CoC.   That   stipulation   is   the   quintessence   and   made mandatory   for   approval   of   the   resolution   plan.   Any   other interpretation would result in rewriting of the provision and doing violence to the legislative intent.  27. It   was   then   contended   that   the   amendment   vide Insolvency and Bankruptcy Code Amendment Act, 2018 (Act th rd No.8 of 2018, dated 18  January, 2018) w.e.f. 23  November, 2017 was to substitute the amended provision, which means 51 that   the   amended   provision   stood   incorporated   as   Section 30(4) from the commencement of I&B Code. This argument will be dealt with a little later while considering the effect of the amended provisions. For the present, we are adverting to the provisions in the I&B Code and the regulations framed there under, as were in force   in October 2017, when the CoC of the concerned corporate debtor was called upon to consider the proposed resolution plan.  28. We  may now take note of the provisions in the 2016 regulations   framed   under   the   I&B   Code.   Chapter­VI   of  the regulations   deals   with   general   meetings   of   the   committee. Chapter­VII with matters relating to voting by the committee. Chapter­VIII   with   the   conduct   of   corporate   insolvency resolution process and Chapter­X with the resolution plan. As the issue under consideration is about the conduct of meeting of   CoC   for   considering   the   proposed   insolvency   resolution plan, we may usefully refer to the dispensation delineated in Chapter­VI and VII, in particular. Regulation 18 is about the meetings of the committee to be convened by the resolution 52 professional   when   he   considers   necessary   or   upon   the requisition   given   by   the   members   of   the   committee, representing 33% of the voting rights. Regulation 19 is about the notice period for convening such a meeting and Regulation 20   is   about   the   service   of   notice   by   electronic   means. Regulation 21 is about the contents of the notice for meeting. Regulation 22 provides for the quorum at the meeting and Regulation   23   recognises   participation   of   the   members   of committee through video conferencing and other audio visual means, as specified therein. In other words, the members of the   committee   need   not   participate   during   voting   propria persona  or in person but can do so through video conferencing or other audio or visual means. The conduct of meeting is governed by Regulation 24 and the method and procedure for voting during such meeting is predicated in Regulation 25 and 26.   Regulation   25   is   about   voting   by   the   members   of   the committee present in the meeting and Regulation 26 is about the voting by either electronic means or through electronic voting system.  53 29. Be it noted, these provisions are regarding the conduct of meetings of the committee generally and including about the method of voting during such meetings. The specific provision regarding   approval   of   a   resolution   plan   can   be   traced   to Regulation 39. Regulation 39, as it was in force at the relevant time in October 2017, read thus:  “ 39. Approval of resolution plan. ­(1) A resolution applicant shall   endeavour   to   submit   a   resolution   plan   prepared   in accordance   with   the   Code   and   these   Regulations   to   the resolution   professional,   thirty   days   before   expiry   of   the maximum   period   permitted   under   section   12   for   the completion of the corporate insolvency resolution process. (2) The resolution professional shall present all resolution plans  that  meet  the  requirements  of the Code and these Regulations to the committee for its consideration. (3) The committee may approve any resolution plan with such modifications as it deems fit.  (4) The resolution professional shall submit the resolution plan   approved   by   the   committee   to   the   Adjudicating Authority with the certification that: (a) the contents of the resolution plan meet all the   requirements   of   the   Code   and   the Regulations; and  (b) the resolution plan has been approved by the committee.  (5) The resolution professional shall forthwith send a copy of   the   order   of   the   Adjudicating   Authority   approving   or rejecting   a   resolution   plan   to   the   participants   and   the resolution applicant.  (6) A provision in a resolution plan which would otherwise require   the   consent   of   the   members   or   partners   of   the 54 corporate debtor, as the case may be, under the terms of the constitutional   documents   of   the   corporate   debtor, shareholders’ agreement, joint venture agreement or other document   of   a   similar   nature,   shall   take   effect notwithstanding that such consent has not been obtained.   (7) No proceedings shall be initiated against the interim resolution professional or the resolution professional, as the case may be, for any actions of the corporate debtor, prior to the insolvency commencement date.  (8) A person in charge of the management or control of the business and operations of the corporate debtor after a resolution plan is approved by the Adjudicating Authority, may make an application to the Adjudicating Authority for an   order   seeking   the   assistance   of   the   local   district administration   in   implementing   the   terms   of   a   resolution plan.”    On a conjoint reading of these provisions it is amply clear that the stipulation is to reckon the percent of “voting share of the financial   creditors”,   for   the   purposes   of   determining   as   to whether the proposed resolution plan has been approved by the CoC or otherwise. When it comes to the method of voting and for determining the outcome of voting with regard to other subjects   (other   than   the   approval   of   the   resolution   plan), discussed in the meeting of the CoC, the same is governed by Regulation 25 as applicable in October 2017. The same read thus:  55 “ 25.   Voting   by   the   committee. ­(1)   the   actions   listed   in section   28(1)   shall   be   considered   in   meetings   of   the committee. (2) Any   action   other   than   those   listed   in   section   28(1) requiring approval of the committee may be considered in meetings of the committee. (3) Where   all   members   are   present   in   a   meeting,   the resolution professional shall take a vote of the members of the committee on any item listed for voting after discussion on the same.  (4) At the conclusion of a vote at the meeting, the resolution   professional   shall   announce   the   decision taken on items along with the names of the members of the committee who voted for or against the decision, or abstained from voting.  (5) If all members are not present at a meeting, a vote shall not be taken at such meeting and the resolution professional shall­ (a) circulate the minutes of the meeting by electronic   means   to   all   members   of   the committee   within   forty­eight   hours   of   the conclusion of the meeting; and  (b) seek a vote on the matters listed for voting in the meeting, by electronic voting system where the voting shall be kept open for twenty four hours from the circulation of the minutes.” (emphasis supplied) Concededly, Regulations 25 and 39 must be read in light of Section   30(4)   of   the   I&B   Code,   concerning   the   process   of approval of a resolution plan. For that, the “percent of voting 56 share of the financial creditors” approving vis­à­vis dissenting ­ is required to be reckoned. It is not on the basis of members present and voting as such. At any rate, the approving votes must   fulfill   the   threshold   percent   of   voting   share   of   the financial creditors. Keeping this clear distinction in mind, it must follow that the resolution plan concerning the respective corporate   debtors,   namely,   KS&PIPL  and   IIL,   is   deemed to have been rejected as it had failed to muster the approval of requisite threshold votes, of not less than 75% of voting share of the financial creditors. It is not possible to countenance any other construction or interpretation, which may run contrary to what has been noted herein before.  30. Thus understood, no fault can be found with the NCLAT for having recorded the fact that the proposed resolution plan in respect of both the corporate debtors was approved by vote of  “less than 75%” of voting share of the financial creditors or deemed to have been rejected. In that event, the inevitable corollary   is   to   initiate   liquidation   process   relating   to   the 57 concerned   corporate   debtor,   as   per   Section   33   of   the   I&B Code.  31. Indeed,   in   terms   of   Section   31   of   the   I&B   Code,   the adjudicating   authority   (NCLT)   is   expected   to   deal   with  two situations. The first is when it does not receive a resolution plan   under   sub­section   (6)   of   Section   30   or   when   the resolution   plan   has   been   rejected   by   the   resolution professional for non­compliance of Section 30(2) of the I&B Code or also when the resolution plan fails to garner approval of not less than seventy five percent of voting share of the financial   creditors,   as   the   case   may   be;   and   there   is   no alternate plan mooted before the expiry of the statutory period. The second is when a resolution plan duly approved by the CoC by not less than 75% of voting share of the financial creditors is submitted before it by the resolution professional under Section 30(6) of the Code, for its approval. 32. In the present case, we are concerned with a situation where in both the resolution processes under consideration, the resolution plan failed to garner support of not less than 58 75% of voting share of the financial creditors. That is the first category   referred   to   above.   In   such   a   situation,   the adjudicating authority can have no other option but to initiate liquidation process in terms of Section 33 (1) of the I&B Code. Section 33 of the I&B Code as applicable at the relevant time in October 2017, read thus:  “ 33. Initiation of liquidation. ­(1) Where the Adjudicating Authority,­ (a) before   the   expiry   of   the   insolvency resolution   process   period   or   the   maximum period permitted for completion of the corporate insolvency resolution process under section 12 or the fast track corporate insolvency resolution process under section 56, as the case may be, does not receive a resolution plan under sub­ section (6) of section 30; or  (b) rejects the resolution plan under section 31 for   the   non­compliance   of   the   requirements specified therein,   It shall­ (i) pass   an   order   requiring   the   corporate debtor to be liquidated in the manner as laid down in this Chapter; (ii) issue a public announcement stating that the corporate debtor is in liquidation; and  (iii) require   such   order   to   be   sent   to   the authority   with   which   the   corporate   debtor   is registered. (2) Where the resolution professional, at any time during the   corporate   insolvency   resolution   process   but   before confirmation of resolution plan, intimates the Adjudicating 59 Authority of the decision of the committee of creditors to liquidate  the  corporate   debtor,  the  Adjudicating   Authority shall pass a liquidation order as referred to in sub­clauses (i) (ii) and (iii) of clause (b) of sub­section (1). (3) Where   the   resolution   plan   approved   by   the Adjudicating   Authority   is   contravened   by   the   concerned corporate   debtor,   any   person   other   than   the   corporate debtor,  whose  interests   are   prejudicially   affected   by   such contravention, may make an application to the Adjudicating Authority for a liquidation order as referred to in sub­clauses (i), (ii) and (iii) of clause (b) of sub­section (1).  (4) On receipt of an application under sub­section (3), if the   Adjudicating   Authority   determines   that   the   corporate debtor has contravened the provisions of the resolution plan, it shall pass a liquidation order as referred to in sub­clauses (i), (ii) and (iii) of clause (b) of sub­section (1). (5) Subject to section 52, when a liquidation order has been   passed,   no   suit   or   other   legal   proceeding   shall   be instituted by or against the corporate debtor: Provided that a suit or other legal proceeding may be instituted   by   the   liquidator,   on   behalf   of   the   corporate debtor, with the prior approval of the Adjudicating Authority. (6) The provisions of sub­section (5) shall not apply  to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.  (7) The order for liquidation under this section shall be deemed to be a notice of discharge to the officers, employees and   workmen   of   the   corporate   debtor,   except   when   the business of  the  corporate debtor  is continued  during  the liquidation process by the liquidator.”   33. As aforesaid, upon receipt of a “rejected” resolution plan the   adjudicating   authority   (NCLT)   is   not   expected   to   do 60 anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed   the   adjudicating   authority   (NCLT)   with   the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC muchless to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I&B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution   process   to   be   completed   within   270   days   (outer limit) failing which, initiation of liquidation process has been made   inevitable   and   mandatory.   In   the   earlier   regime,   the corporate   debtor   could   indefinitely   continue   to   enjoy   the protection   given   under   Section   22   of   Sick   Industrial Companies Act, 1985  or under other such enactments which has now been forsaken. Besides, the commercial wisdom of the CoC has been given paramount status without any judicial 61 intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject matter expressed by them after due deliberations in the CoC meetings through voting, as per voting shares, is a collective business   decision.   The   legislature,   consciously,   has   not provided any ground to challenge the “commercial wisdom” of the individual financial creditors or their collective decision before   the   adjudicating   authority.   That   is   made   non­ justiciable.  34. In the report of the Bankruptcy Law Reforms Committee of   November   2015,   primacy   has   been   given   to   the   CoC   to evaluate the various possibilities and make a decision. It has been observed thus:  “The key economic question in the bankruptcy process 62 When a firm (referred to as the corporate debtor in the draft law) defaults, the question arises about what is to be done. Many possibilities can be envisioned. One possibility is to take the firm into liquidation. Another possibility is to negotiate a debt restructuring, where  the creditors accept a reduction of debt on an NPV basis, and hope that the negotiated value exceeds the liquidation value. Another possibility is to sell the firm as a going concern and   use   the   proceeds   to   pay   creditors.   Many   hybrid structures of these broad categories can be envisioned. The Committee believes that there is only one correct forum for evaluating such possibilities, and making a decision:   a   creditors   committee,   where   all   financial creditors have votes in proportion to the magnitude of debt that they hold. In the past, laws in India have brought arms of the Government (legislature, executive or judiciary) into this question. This has been strictly avoided by the Committee. The appropriate disposition of a defaulting firm is a business decision, and only the ”   creditors should make it   .   (emphasis supplied) The report also highlights that having timelines is the essence of   the   resolution   process.   It   then   refers   to   the   principles driving the design of the new insolvency bankruptcy resolution frame work. While dealing with this aspect, it is noted that the Code would facilitate the assessment of the viability of the enterprise at a very early stage. The relevant extract of the report reads thus: “Principles driving the design 63 The Committee chose the following principles to design the   new   insolvency   and   bankruptcy   resolution framework: I.  The Code will facilitate the assessment of viability of . the enterprise at a very early stage (1) The law must explicitly state that the viability of the enterprise is a matter of business, and that matters of business can only be negotiated between creditors and debtor.   While   viability   is   assessed   as   a   negotiation between creditors and debtor, the final decision has to be an agreement among creditors who are the financiers willing to bear the loss in the insolvency. (2)  The   legislature   and   the   courts   must   control   the process   of   resolution,   but   not   be   burdened   to   make business decisions. (3)   The   law   must   set   up   a   calm   period   for   insolvency resolution where the debtor can negotiate in the assessment of   viability   without   fear   of   debt   recovery   enforcement   by creditors. (4) The law must appoint a resolution professional as the manager of the resolution period, so that the creditors can negotiate the assessment of viability with the confidence that the debtors will not take any action to erode the value of the enterprise.   The   professional   will   have   the   power   and responsibility   to   monitor   and   manage   the   operations   and assets of the enterprise. The professional will manage the resolution process of negotiation to ensure balance of power between the creditors and debtor, and protect the rights of all creditors. The professional will ensure the reduction of asymmetry of information between creditors and debtor in the resolution process. …………………… IV.  The Code will ensure a collective process . (9)   The   law   must   ensure   that   all   key   stakeholders   will participate   to   collectively   assess   viability .   The   law   must ensure that all creditors who have the capability and the willingness to restructure their liabilities must be part of the negotiation process. The liabilities of all creditors who are not part of the negotiation process must also be met in any negotiated solution. V.  The Code will respect the rights of all creditors equally . 64 (10) The law must be impartial to the type of creditor in counting their weight in the vote on the final solution in resolving insolvency. VI.  The Code must ensure that, when the negotiations fail to establish   viability,   the   outcome   of   bankruptcy   must   be binding . (11)   The   law   must   order   the   liquidation   of   an   enterprise which   has   been   found   unviable.   This   outcome   of   the negotiations should be protected against all appeals other than for very exceptional cases. …” (emphasis   supplied) 35. Whereas,   the   discretion   of   the   adjudicating   authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan “as approved” by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides : (i) the   payment   of   insolvency   resolution   process   costs   in   a specified manner in priority to the repayment of other debts of the   corporate   debtor,     (ii)   the   repayment   of   the   debts   of 65 operational   creditors   in   prescribed   manner,     (iii)   the management of  the  affairs of   the  corporate  debtor,  (iv) the implementation   and   supervision   of   the   resolution   plan,   (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in   which   the   financial   creditors   ought   to   or   ought   not   to exercise their commercial wisdom during the voting on the resolution   plan   under   Section   30(4)   of   the   I&B   Code.   The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections 66 backed   by   normative   data   but   still   in   the   opinion   of   the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the   financial  creditors   who  are  called  upon  to  vote   on the resolution plan under Section 30(4) of the I&B Code.  36. For the same reason, even the jurisdiction of the NCLAT being   in   continuation   of   the   proceedings   would   be circumscribed in that regard and more particularly on account of   Section   32   of   the   I&B   Code,   which   envisages   that   any appeal from an order approving the resolution plan shall be in the manner and on the grounds specified in Section 61(3) of the I&B Code. Section 61(3) of the I&B Code reads thus:   “ ­(1) Notwithstanding 61. Appeals and Appellate Authority. anything  to the  contrary   contained  under   the Companies Act, 2013 (18 of 2013), any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal.    (2) xxx xxx xxx (3) An appeal against an order approving a resolution plan under   section   31   may   be   filed   on  the   following   grounds, namely:­ (i)   the   approved   resolution   plan   is   in contravention of the provisions of any law for the time being in force; 67 (ii)   there   has   been   material   irregularity   in exercise   of   the   powers   by   the   resolution professional   during   the   corporate   insolvency resolution period; (iii) the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board; (iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or  (v) the resolution plan does not comply with any other criteria specified by the Board. xxx xxx xxx.”  37. On a bare reading of the provisions of the I&B Code, it would appear that the remedy of appeal under Section 61(1) is against an “order passed by the adjudicating authority (NCLT)” – which we will assume may also pertain to recording of the fact that the proposed resolution plan has been rejected or not approved by a vote of not less than 75% of voting share of the financial   creditors.   Indubitably,   the   remedy   of   appeal including the width of jurisdiction of the appellate authority and   the   grounds   of   appeal,   is   a   creature   of   statute.   The provisions investing jurisdiction and authority in the NCLT or 68 NCLAT   as   noticed   earlier,   has   not   made   the   commercial decision exercised by the CoC of not approving the resolution plan   or   rejecting   the   same,   justiciable.   This   position   is reinforced from the limited grounds specified for instituting an appeal that too against an order “approving a resolution plan” under Section 31. First, that the approved resolution plan is in contravention of the provisions of any law for the time being in force. Second, there has been material irregularity in exercise of powers “by the resolution professional” during the corporate insolvency   resolution   period.   Third,   the   debts   owed   to operational   creditors   have   not   been   provided   for   in   the resolution   plan   in   the   prescribed   manner.   Fourth,   the insolvency resolution plan costs have not been provided for repayment in priority to all other debts. Fifth, the resolution plan does not comply with any other criteria specified by the Board.   Significantly,   the   matters   or   grounds   ­   be   it   under Section 30(2) or under Section 61(3) of the I&B Code ­ are regarding testing the validity of the “approved” resolution plan by the CoC; and not for approving the resolution plan which 69 has been disapproved or deemed to have been rejected by the CoC in exercise of its business decision.    38. Indubitably,   the   inquiry   in   such   an   appeal   would   be limited to the power exercisable by the resolution professional under   Section   30(2)   of   the   I&B   Code   or,   at   best,   by   the adjudicating authority (NCLT) under Section 31(2) read with 31(1) of the I&B Code. No other inquiry would be permissible. Further,   the   jurisdiction   bestowed   upon   the   appellate authority   (NCLAT)   is   also   expressly   circumscribed.   It   can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters “other than” enquiry into the autonomy or commercial wisdom of   the   dissenting   financial   creditors.   Thus,   the   prescribed authorities   (NCLT/NCLAT)   have   been   endowed   with   limited jurisdiction as specified in the I&B Code and not to act as a court of equity or exercise plenary powers. 39. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction   to   reverse   the   commercial   wisdom   of   the 70 dissenting   financial  creditors  and   that  too on  the  specious ground  that it is  only an opinion of  the minority financial creditors.   The   fact   that   substantial   or   majority   percent   of financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is  by a vote of not   less   than   75%   (after   amendment   of   2018   w.e.f. 06.06.2018, 66%) of voting share of the financial creditors. To put it differently, the action of liquidation process postulated in Chapter­III of the I&B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October,   2017)   of   voting   share   of   the   financial   creditors. Conversely, the legislative intent is to uphold the opinion or hypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified percent (25% in October,   2017;   and   now   after   the   amendment   w.e.f. 06.06.2018, 44%).   The inevitable outcome of voting by not less   than   requisite   percent   of   voting   share   of   financial creditors to disapprove the proposed resolution plan,  de jure , entails in its deemed rejection.  71 40. Notably, the threshold of voting share of the dissenting financial   creditors   for   rejecting   the   resolution   plan   is   way below the simple majority mark, namely not less than 25% (and even after amendment w.e.f. 06.06.2018, 44%). Thus, the scrutiny of the resolution plan is required to pass through the litmus test of not less than requisite (75% or 66% as may be applicable) of voting share ­ a strict regime. That means the resolution plan must appear, to not less than requisite voting share of the financial creditors, to be an overall credible plan, capable of achieving timelines specified in the Code generally, assuring   successful   revival   of   the   corporate   debtor   and disavowing endless speculation.  41. The counsel appearing for the resolution applicant and the   stakeholders   supporting   the   resolution   plan   of   the concerned corporate debtor, were at pains to persuade us to take a view that voting by the dissenting financial creditors suffers   from   the   vice   of   being   unreasonable,   irrational, unintelligible and an abuse of exercise of power. The power bestowed on the financial creditors to cast their vote under 72 Section 30(4) is coupled with a duty to exercise that power with utmost care, caution and reason, keeping in mind the legislative   intent   and   the   spirit   of   the   I&B   Code   ­   fullest attempt should be made to revive the corporate debtors and not to mechanically shove them to the brink of liquidation process,   which   has   the   inevitable   impact   on   larger   public interests and the stakeholders in particular, including workers associated with the company.  42. The argument, though attractive at the first blush, but if accepted, would require us to re­write the provisions of the I&B   Code.   It   would   also   result   in   doing   violence   to   the legislative intent of having consciously not stipulated that as a ground ­ to challenge the commercial wisdom of the minority (dissenting)   financial   creditors.   Concededly,   the   process   of resolution plan is necessitated in respect of corporate debtors in whom their financial creditors have lost hope of recovery and   who   have   turned   into   non­performer   or   a   chronic defaulter. The fact that the concerned corporate debtor was still able to carry on its business activities does not obligate 73 the financial creditors to postpone the recovery of the debt due or to prolong their losses indefinitely. Be that as it may, the scope of enquiry and the grounds on which the decision of “approval” of the resolution plan by the CoC can be interfered with by the adjudicating authority (NCLT), has been set out in Section 31(1) read with Section 30(2) and by the  appellate tribunal (NCLAT) under Section 32 read with Section 61(3) of the I&B Code. No corresponding provision has been envisaged by the legislature to empower the resolution professional, the adjudicating authority (NCLT) or for that matter the appellate authority (NCLAT), to reverse the “commercial decision” of the CoC   muchless   of   the   dissenting   financial   creditors   for   not supporting the proposed resolution plan. Whereas, from the legislative   history   there   is   contra   indication   that   the commercial or business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority.  43. It was argued that the dissenting financial creditors have not   assigned   any   reason   for   recording   their   dissent   and 74 therefore,   their   action   is   vitiated.   As   per   the   provisions applicable at the relevant time in October 2017, there was no requirement   of   recording   reasons   for   the   dissent.   That requirement has been introduced by an amendment to the th regulations effected in 2018 w.e.f. 4  July, 2018. Whether that amendment   is   prospective   or   has   retrospective   effect   is   a matter which will be considered a little later.  44. Suffice   it   to   observe   that   in   the   I&B   Code   and   the regulations framed thereunder as applicable in October 2017, there  was   no  need  for   the  dissenting   financial  creditors to record reasons for disapproving or rejecting a resolution plan. Further, as aforementioned, there is no provision in the I&B Code which empowers the adjudicating authority (NCLT) to oversee the justness of the approach of the dissenting financial creditors in rejecting the proposed resolution plan or to engage in   judicial   review   thereof.   Concededly,   the   inquiry   by   the resolution   professional   precedes   the   consideration   of   the resolution plan by the CoC. The resolution professional is not required to express his opinion on matters within the domain 75 of the financial creditor(s), to approve or reject the resolution plan,   under   Section   30(4)   of   the   I&B   Code.     At   best,   the Adjudicating Authority (NCLT) may cause an enquiry into the “approved” resolution plan on limited grounds referred to in Section 30(2) read with Section 31(1) of the I&B Code.   It cannot make any other inquiry nor is competent to issue any direction in relation to the exercise of commercial wisdom of the   financial   creditors   ­   be   it   for   approving,   rejecting   or abstaining, as the case may be. Even the inquiry before the Appellate Authority (NCLAT) is limited to the grounds under Section   61(3)   of   the   I&B   Code.   It   does   not   postulate jurisdiction   to   undertake   scrutiny   of   the   justness   of   the opinion expressed by financial creditors at the time of voting. To   take   any   other   view   would   enable   even   the   minority dissenting financial creditors to question the logic or justness of the commercial opinion expressed by the majority of the financial creditors albeit by requisite percent of voting share to approve the resolution plan; and in the process authorize the adjudicating authority to reject the approved resolution plan 76 upon accepting such a challenge. That is not the scope of jurisdiction vested in the adjudicating authority under Section 31 of the I&B Code dealing with approval of the resolution plan.  To put it differently, since none of the grounds available 45. under   Section   30(2)   or   Section   61(3)   of   the   I&B   Code   are attracted   in   the   fact   situation   of   the   present   case,   the Adjudicating   Authority   (NCLT)   as   well   as   the   Appellate Authority (NCLAT) had no other option but to record that the proposed resolution plan concerning the respective corporate debtor   (KS&PIPL   and   IIL)   stood   rejected.   Further,   as   no alternative   resolution   plan   was   approved   by   the   requisite percent of voting share of the financial creditors before the expiry of the statutory period of 270 days, the inevitable sequel is to pass an order directing initiation of liquidation process against   the   concerned   corporate   debtor   in   the   manner specified in Chapter III of the I&B Code. 46. Realising this position, the resolution applicant and the stakeholders supporting the proposed resolution plan of the 77 concerned corporate debtors, would contend that the NCLAT has failed to give effect to the amended provisions which came rd into effect from 23   day of November, 2017 and the second th amendment from 6   June, 2018 to Section 30(4) of the I&B Code in particular. According to them, the said amendment ought to be given retrospective effect and in any case, being retroactive in nature, ought to govern the proceedings before the NCLAT where the appeal was pending for consideration. For   considering   this   submission,   we   may   advert   to   the Insolvency   and   Bankruptcy   Code   (Amendment)   Act,   2017 (No.8 of 2018) which is deemed to have come into force on the rd 23  day of November, 2017. Section 6 of this Act purports to substitute  Section 30(4) of  the principal Act.  The amended sub­section (4) reads thus: “ In section 30 of the principal Act, for sub­section (4), the 6.  following sub­section shall be substituted, namely:­ (4) The committee of creditors may approve a resolution plan by a vote of not less than seventy­five per cent. of voting share   of   the   financial   creditors,   after   considering   its feasibility and viability, 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,   2017,   where   the   resolution applicant is ineligible under section 29A and may require the 78 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 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: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub­section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub­section.”. The   change   brought   about   by   this   amendment   is 47. insertion   of   words   “after   considering   its   feasibility   and viability, and such other requirements as may be specified by the Board”. In addition, three provisos have been added to sub­section (4).  For considering the issue on hand, the three provisos are not relevant. As regards the insertion of the above quoted   words   in   sub­section   (4),   that   does   not   alter   the requirement regarding approval of a resolution plan, by a vote of not less than 75% of voting share of the financial creditors. The amendment is only to declare that the financial creditors ought to consider the feasibility and viability and such other requirements   as   may   be   specified   by   the   Board,   while exercising their option on the resolution plan ­ to approve or 79 not to approve the same. It is rudimentary that the financial creditors (in most cases are national Bankers), who are called upon to consider the proposed resolution plan would take into account all the relevant materials, including the feasibility and viability and such other requirements as may be specified by the   Board.   Additionally,   the   financial   creditors   are   also required to bear in mind that the legislative intent is to bring about resolution and revival of the corporate debtors so as to benefit not only the corporate debtor but also other stake­ holders in equal measure.  Suffice it to observe that the amended provision merely 48. restates as to what the financial creditors are expected to bear in mind whilst expressing their choice during consideration of the proposal for approval of a resolution plan. No more and no less. Indubitably, the legislature has consciously not provided for   a   ground   to   challenge   the   justness   of   the   “commercial decision” expressed by the financial creditors – be it to approve or   reject   the   resolution   plan.   The   opinion   so   expressed  by voting is non­justiciable. Further, in the present cases, there 80 is nothing to indicate as to which other requirements specified by the Board at the relevant time have not been fulfilled by the dissenting   financial   creditors.   As   noted   earlier,   the   Board established under Section 188 of the I&B Code can perform powers and functions specified in Section 196 of the I&B Code. That does not empower the Board to specify requirements for exercising commercial decisions by the financial creditors in the matters of approval of the resolution plan or liquidation process.   Viewed   thus,   the   amendment   under   consideration does not take the matter any further.    We may not be understood to have expressed any opinion 49. either way about the effect of the three provisos introduced by the same amendment to Section 30(4) ­ as to whether it would have retrospective or retroactive effect.  That question does not arise   for   consideration  in   these   appeals.   Our   discussion  is restricted to the efficacy of the amendment to main provision viz., Section  30(4), whereby the  above quoted words (“after considering   feasibility   and   viability,   and   such   other 81 requirements as may be specified by the Board”) have been inserted.  50. The   learned   counsel   for   the   resolution   applicant   and other   stakeholders   supporting   the   resolution   plan   of   the concerned     creditors,   next   relied   upon   the   amendment   to th Section 30(4) which has come into force w.e.f. 6  day of June, 2018   vide     the   Insolvency   and   Bankruptcy   Code   (Second Amendment) Act, 2018 (No.8 of 2018). Vide section 23(iii)(a) of the   said   amendment   Act,   the   word   “seventy­five”     in   sub­ section (4) of Section 30 has been substituted by the word “sixty­six”.  Taking clue from this amendment, it was argued that   since   the   amendment   substitutes   the   threshold requirement  of  75% to  66%  and   since  the   same   has   been brought into force when appeals were pending, the NCLAT was obliged to consider its effect on the present cases. Further, being   substitution,   it   must   be   assumed   that   the   amended provision was always there from the beginning of the Code.   51. We are not impressed by this submission. In our opinion, by this amendment,  a new norm and qualifying standard for 82 approval   of   a   resolution   plan     has   been   introduced.   That cannot   be   treated   as   a   declaratory/clarificatory   or   stricto sensu   procedural   matter   as   such.   Whereas,   the   stated Amendment   Act   makes   it   expressly   clear   that   it   shall   be th deemed to have come into force on the 6  day of June, 2018. Thus, by mere use of expression “substituted” in Section 23(iii) (a) of the Amendment Act of 2018, it would not make the provision   retrospective   in   operation   or   having   retroactive effect. This interpretation is reinforced by the fact that there is no   indication   in   the   Amendment   Act   of   2018   that   the legislature   intended   to   undo   and/or   govern   the   decisions already taken by the CoC of the concerned corporate debtors prior to 6­06­2018.   52. Our attention was invited to the report of the Insolvency Law Committee of March, 2018. Even the said report does not mention about introducing the amendment to Section 30(4), regarding   the   threshold   requirement   with   retrospective   or retroactive   effect.   Indeed,   the   report   has   noted   about   the necessity to alter the low threshold level of 25% of voting share 83 for rejection of the resolution plan which, it felt, should be increased to 44%.  It may be useful to reproduce paragraph 11 of   the   said   report   dealing   with   voting   share   threshold   for decisions of the CoC, which reads thus: “ 11.VOTING   SHARE   THRESHOLD   FOR   DECISIONS   OF THE COC 11.1  Section 21(8) of the Code provides that all decisions of the CoC shall be taken by a vote of not less than 75 percent of the voting share of the financial creditors. Regulation 25(5) read with regulation 26 of the CIRP Regulations provides that if all members of the CoC are not present, an option to vote through electronic means must be provided. 11.2  It   was   represented   to   the   Committee   that   the   high threshold of 75 percent of voting share of financial creditors for decisions of the CoC was proving to be a road­block in the resolution process. Effectively, as a result of the high threshold, blocking the resolution plan and other decisions of the CoC, was easier than approving these. 11.3  The Committee considered the fact that, so far, various benches of the NCLT have passed liquidation orders in 30 cases. 76 Out of these 30 cases, only nine cases went into liquidation on account of rejection by the CoC. Further, only in one case, a liquidation order was passed owing to lack of consensus of 75 percent financial creditors for approval of the resolution plan. 77 In respect of the remaining  eight cases, the plan was rejected by an overwhelming majority of voting share above 80 percent.   Thus, empirical evidence suggests that the apprehension that companies are being put into liquidation by minority creditors is pre­mature. The Committee reiterated that the objective of the Code is to respect the commercial wisdom of the CoC. 84 11.4 The Committee noted the voting thresholds across other statutes   and   guidelines   that   deal/have   dealt   with rehabilitation of companies as follows: (a) Section 230(6) of the CA 2013 which deals with power to compromise or make arrangements with creditors and members provides that any compromise or arrangement must be approved by 75 percent in value of creditors or class of creditors or members or class of members, as the case maybe. (b)   Section   262   of   the   CA   201378   provided   for   a scheme   of   rehabilitation   which   required   approval   by   (i) secured creditors representing 75 percent in value of the debts   owed   by   the   company   to   such   creditors;   and   (ii) unsecured creditors representing 25 percent in value of the amount of debt owed to them. Further, in case of voluntary winding   up,   section   311   of   the   CA   2013   provided   for replacement  of the company liquidator by  approval of 75 percent   of   creditors   or   75   percent   of   members   of   the company.79 (c)   The   Joint   Lender’s   Forum   (“JLF”)   framework formulated by the RBI (which has now been replaced) to enable creditors to identify and deal with stressed assets at an early stage prescribed a voting threshold of 60 percent (reduced   from   75   percent)   of   creditors   by   value   and   50 percent (reduced from 60 percent) of creditors by number in the   JLF,   for   proceeding   with   the   restructuring   of   the account.80 (d)   Section   13(9)   of   the   Securitisation   and Reconstruction   of   Financial   Assets   and   Enforcement   of Security   Interest   Act,   2002   provided   that   in   the   case   of financing   of   a   financial   asset   by   more   than   one   secured creditors or joint financing of a financial asset by secured creditors, no secured creditor would be entitled to exercise any or all of the rights conferred on her under the relevant law   (such   as   taking   possession   of   the   secured   asset   or takeover the management of the borrower) unless exercise of 85 such   right   was   agreed   upon   by   secured   creditors representing   not   less   than   60   percent   (reduced   from   75 percent)  81  in  value  of  the  amount  outstanding  as on  a record date and such action was binding on all the secured creditors.  11.5 The   Committee   also   noted   that   globally, bankruptcy   laws   prescribe   different   voting   thresholds   for decisions of the CoC. In USA, approval of a plan requires 66 percent or more voting share in value and 50 percent or more voting share in number for each class of creditors.82 The   position   is   similar   in   Canada,   however,   such requirement applies to each class of unsecured creditors.83 In the UK, approval of a plan under administration requires a   simple   majority   in   value   of   the   creditors   present   and voting. While such threshold is higher in Singapore as the requirement therein is to obtain 75 percent or more of voting share by value and more than 50 percent voting share in number of creditors present and voting, for approval of the plan.84 The Committee was of the view a higher threshold with   the   present   and   voting   requirement,   or   a   lower threshold sans the present and voting requirement, may be adopted. 11.6    After   due   deliberation   and   factoring   in   the experience   of   past   restructuring   laws   in   India   and international best practices, the Committee agreed that to further the stated object of the Code i.e. to promote resolution, the voting share for approval of resolution plan and other critical decisions may be reduced from 75 percent to 66 percent or more of the voting share of the financial   creditors.   In   addition   to   approval   of   the resolution   plan   under   section   30(4),   other   critical decisions are extension  of  the  CIRP beyond  180 days under section 12(2), replacement or appointment of RP under sections 22(2) and 27(2), and passing a resolution for liquidation under section 33(2) of the Code. Further, for approval of the other routine decisions for continuing 86 the corporate debtor as going concern by the IRP/RP, the voting share threshold may be reduced to 51 percent or more of the voting share of the financial creditors. ”   (emphasis in para 11.3 supplied) 53. Significantly,   the   report   mentions   that   the   empirical record suggests that the apprehension regarding companies are being put into liquidation by minority creditors is pre­ mature and further that the objective of the Code is to respect the   commercial   wisdom   of   the   CoC.   As   aforesaid,   the amendment of 2018 cannot be considered as clarificatory but it   envisages   a   new   norm   of   threshold   for   considering   the decision of the CoC as approval of the resolution plan.   The th Amendment Act of 2018 having come into force w.e.f. 6  day of June, 2018, therefore, will have prospective application and apply only to the decisions of CoC taken on or after that date concerning the approval of resolution plan.  54. Reliance was placed by the resolution applicants and the stakeholders supporting the resolution plan of the concerned corporate   debtors,   on   the   decisions   of   this   Court   in   (supra),   Gottumukkala   Venkata   Krishamraju B.K. 87 Educational Services Private Ltd.  (supra), and  State Bank   (supra). In the case of   (supra), this of India   Gottumukkala Court, after adverting to the dictum in  Government of India   (supra), and   Vs. India Tobacco Association Zile Singh vs. State of Haryana  (supra), opined in paragraph 15 as under:  “15.   Ordinarily   wherever   the   word   ‘substitute’   or ‘substitution’ is used by the legislature, it has the effect of deleting   the   old   provision   and   make   the   new   provision operative. The process of substitution consists of two steps: first, the old rule is made to cease to exist and, next, the new rule is brought into existence in its place. The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a part of itself, into the earlier, then the earlier Act must thereafter be read and construed as if the altered words had been written into the earlier Act with   pen  and   ink   and   the   old   words   scored   out   so   that thereafter there is no need to refer to the amending Act at all.   No   doubt,   in   certain   situations,   the   Court   having regard to the purport and object sought to be achieved by the Legislature may construe the word "substitution" as   an   "amendment"   having   a   prospective   effect. Therefore, we do not think that it is a universal rule that the word ‘substitution’ necessarily or always connotes two severable steps, that is to say, one of repeal and another of a fresh enactment even if it implies two steps. However, the aforesaid general meaning is to be given effect   to,   unless   it   is   found   that   legislature   intended otherwise.   Insofar   as   present   case   is   concerned,   as discussed hereinafter, the legislative intent was also to give effect   to   the   amended   provision   even   in   respect   of   those incumbents who were in service as on September 01, 2016.” (emphasis supplied) 88 The Court has restated the position that there can be no hard and   fast   rule   merely   because   of   the   usage   of   expression “substituted” in the amendment Act. For, in certain situations like the case on hand, the amendment will have prospective effect as it is not intended to reverse or nullify the decisions already taken by the CoC of the concerned corporate debtors before coming into force of the amended provision. 55. This   Court   in   Thirumalai   Chemicals   Limited   Vs. 24 ,  in paragraph 23, observed that it Union of India and Ors. is   trite   law   that   every   statute   is   prospective   unless   it   is expressly   or   by   necessary   implication   made   to   have retrospective operation. This proposition has been reiterated in Purbanchal Cables & Conductors (P) Ltd. Vs. Assam SEB 25 and Anr.  in paragraphs 51, which reads thus:  “51.  There   is   no   doubt   about   the   fact   that   the   Act   is   a substantive law as vested rights of entitlement to a higher rate of interest in case of delayed payment accrues in favour of the supplier and a corresponding liability is imposed on the buyer.  This Court, time and again, has observed that any substantive law shall operate prospectively unless retrospective   operation   is   clearly   made   out   in   the 24  (2011) 6 SCC 739 25  (2012) 7 SCC 462 89 language of the statute. Only a procedural or declaratory law operates retrospectively as there is no vested right . in procedure (emphasis supplied) It may be useful to notice the exposition in   CIT Vs. Vatika 26 In   paragraph   29,   the   Court   observed Township   (P)   Ltd.   thus: “29. The obvious basis of the principle against retrospectivity is the principle of “ fairness ”, which must be the basis of every legal rule as was observed in   L’Office Cherifien des Phosphates   v.   Yamashita­Shinnihon   Steamship   Co.   Ltd. 7 Thus,   legislations   which   modified   accrued   rights   or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation   We need not note the or to explain a former legislation. cornucopia   of   case   law   available   on   the   subject   because aforesaid   legal   position   clearly   emerges   from   the   various decisions   and   this   legal   position   was   conceded   by   the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later.”   (emphasis supplied) Once again, in  Vijayalakshmi Rice Mills, New Contractors 27 Co. and Ors. Vs. State of Andhra Pradesh ,  in paragraph 5, the Court observed thus:    26  (2015) 1 SCC 1 27  (1976) 3 SCC 37 90 “5.  Mr Nariman appearing on behalf of the appellants has laid great emphasis on the word “substituted” occurring in clause 2 of the Rice (Andhra Pradesh) Price Control (Third Amendment) Order, 1964 and has urged that the claim of the   appellants   cannot   be   validly   ignored.   Elaborating   his submission, counsel has contended that as the prices fixed by   the   Government   are   meant   for   the   entire   season,   the appellants have to be paid at the controlled price as fixed vide   the   Rice   (Andhra   Pradesh)   Price   Control   (Third Amendment) Order, 1964, regardless of the dates on which the   supplies   were   made.   We   cannot   accede   to   this contention. It is no doubt true that the literal meaning of the word “substitute” is “to replace” but the question before   us   is   from   which   date   the   substitution   or replacement of the new schedule took effect. There is no deeming   clause   or   some   such   provision   in   the   Rice (Andhra   Pradesh)   Price   Control   (Third   Amendment) Order, 1964 to indicate that it was intended to have a retrospective   effect.   It   is   a   well   recognized   rule   of interpretation   that   in   the   absence   of   express   words   or appropriate   language   from   which   retrospectivity   may   be inferred, a notification takes effect from the date it is issued and not from any prior date. The principle is also well settled that statutes should not be construed so as to create new disabilities or obligations or impose new duties in respect of transactions   which   were   complete   at   the   time   of   the amending Act came into force. See  Nani Gopal Mitra  v.  State of Bihar 1.” (emphasis supplied) 56. As regards the decision in  B.K. Educational  (supra), the Court was called upon to consider the question as to whether the Limitation Act, 1963 will apply to applications that are made under Section 7 and/or Section 9 of the Code on and from its commencement on 01­12­2016 till 06­06­2018. That 91 question   was   examined   in   the   context   of   Section   238­A inserted in the I&B Code by the self­same amendment Act of 2018. The Court after adverting to the contents of the report of the   Insolvency   Law   Committee   of   March,   2018   and   other provisions   of   the   Code   and   other   enactments,   opined   that Section   238­A   was   clarificatory   in   nature   and   being   a procedural law,  came to hold that it had retrospective effect. The Court held that taking any other view would result in an incongruous situation as the provisions of the Limitation Act would apply in some set of cases to be decided by the same Tribunal and not in other set of cases. Besides, the Court adverted to the principle that right to sue accrues on the date when default occurs and if the default occurred even three years prior to the date of filing of the application, the same cannot be treated as “debt that is due and payable” or “debt” due.    57. In the case of   State Bank of India   (supra), the Court considered the question as to whether Section 14 of the I&B 92 Code, which provides for moratorium for the period mentioned in the Code, insolvency would apply to a personal guarantor of a corporate debtor. Even in this judgment, the Court after adverting   to   all   the   relevant   materials   and   the   governing provisions in the Code, concluded that the amended Section 14 was only to clarify and set at rest what the Committee thought was an over­board interpretation of Section 14. On that reasoning the Court concluded that the amendment of Section 14 had retrospective effect. 58.   In  the   present   case,   however,   the   amendment   under consideration   pertaining   to   Section   30(4),   is   to   modify   the voting share threshold for decisions of the CoC and cannot be treated  as  clarificatory  in  nature.  It changes  the   qualifying standards for reckoning the decision of the CoC concerning the   process   of   approval   of   a   resolution   plan.   The rights/obligations   crystallized   between   the   parties   and,   in particular, the dissenting financial creditors in October 2017, in terms of the governing provisions can be divested or undone 93 only by a law made in that behalf by the legislature. There is no indication either in the report of the Committee or in the Amendment Act of 2018 that the legislature intended to undo th the decisions of the CoC already taken prior to 6  day of June, 2018. It is not possible to fathom how the provisions of the amendment Act 2018, reducing the threshold percent of voting share   can   be   perceived   as   declaratory   or   clarificatory   in nature.   In   such   a   situation,   the   NCLAT   could   not   have examined the case on the basis of the amended provision. For the same reason, the NCLT could not have adopted a different approach in these matters. Hence, no fault can be found with the impugned decision of the NCLAT.  59. In our view, no other contention raised to support the resolution plan of the concerned corporate debtors would be of any avail. Even so, we may advert to the argument regarding the effect of amendment of Regulation 39 which has come into th force with effect from 4  July, 2018. Prior to that amendment, Regulation   39(3)   merely   provided   that   the   Committee   may 94 approve   any   resolution   plan   with   such   modifications   as   it deems fit. This was amended vide Notification dated 3rd July, 2018 and the substituted Regulation 39(3), now reads thus: “ 39. Approval of resolution plan. ­ xxx xxx xxx (3)   The   committee   shall   evaluate   the   resolution   plans received   under   sub­regulation   (1)   strictly   as   per   the evaluation matrix to identify the best resolution plan and may approve it with such modification as it deems fit: PROVIDED that the committee shall record the reasons for approving or rejecting a resolution plan.”     60. In the first place, amendment to regulation cannot have retrospective effect so as to impact the decision of the CoC of the concerned corporate debtor – taken before the amendment of the said regulation. There is no indication in the Code as amended or the regulations to suggest that as a consequence of   this   amendment   the   decisions   aleady   taken   by   the rd concerned CoC prior to 3  July, 2018 be treated as deemed to have been vitiated or for that matter, necessitating reversion of the proposal to CoC for recording reasons, that too beyond the statutory period of 270 days. A new life cannot be infused in 95 the resolution plan which did not fructify within the statutory period, by such circuitous route.    61. Assuming that this provision was applicable to the cases on hand, non­recording of reasons for approving or rejecting the resolution plan by the concerned financial creditor during the voting in the meeting of CoC, would not render the final collective decision of CoC nullity   per se . Concededly, if the objection to the resolution plan is on account of infraction of ground(s) specified in Sections 30(2) and 61(3), that must be specifically and expressly raised at the relevant time.  For, the approval of the resolution plan by the CoC can be challenged on those grounds. However, if the opposition to the proposed resolution plan is purely a commercial or business decision, the   same,   being   non­justiciable,   is   not   open   to   challenge before the Adjudicating Authority (NCLT) or for that matter the Appellate   Authority   (NCLAT).   If   so,   non­recording   of   any reason  for taking such commercial decision will be of no avail. In   the   present   case,   admittedly,   the   dissenting   financial creditors   have   rejected   the   resolution   plan   in   exercise   of 96 business/commercial   decision   and   not   because   of   non­ compliance of the grounds specified in Section 30(2) or Section 61(3), as such. Resultantly, the amended regulation pressed into service, will be of no avail. 62. Relying on the dictum in  Mardia Chemicals  (supra), in particular paragraph 45, it was argued that even in regard to the option exercisable by the financial creditors under Section 30(4),   the   requirement   of   giving   reasons   for   approval   or disapproval of the proposed resolution plan must be read into it.   In  that   case,   the   Court  had   considered   the   mechanism specified   in   Section   13   of   the   Securitisation   and Reconstruction   of   Financial   Assets   and   Enforcement   of Security Interest Act, 2002, which provided for giving a notice to the borrower and upon receipt of such notice the borrower could raise objections as to why the proposed action of the secured creditor was uncalled for. In that context, this Court in paragraph 45, observed thus: “45. In the background we have indicated above, we may consider as to what forums or remedies are available to the 97 borrower to ventilate his grievance.  The purpose of serving a   notice   upon   the   borrower   under   sub­section   (2)   of Section 13 of the Act is, that a reply may be submitted by   the   borrower   explaining   the   reasons   as   to   why measures may or may not be taken under sub­section (4) of   Section   13   in   case   of   non­compliance   with   notice within 60 days. The creditor must apply its mind to the objections raised in reply to such notice and an internal mechanism   must   be   particularly   evolved   to   consider such objections raised in the reply to the notice.   There may   be   some   meaningful   consideration   of   the   objections raised rather than to ritually reject them and proceed to take drastic measures under sub­section (4) of Section 13 of the Act.   Once such a duty is envisaged on the part of the creditor it would only be conducive to the principles of fairness   on   the   part   of   the   banks   and   financial institutions in dealing with their borrowers to apprise them of the reason for not accepting the objections or points raised in reply to the notice served upon them before proceeding to take measures under sub­section (4) of Section 13. Such reasons, overruling the objections of the   borrower,   must   also   be   communicated   to   the   It   will   only   be   in borrower   by   the   secured   creditor. fulfillment of a requirement of reasonableness and fairness in   the   dealings   of   institutional   financing   which   is   so important   from   the   point   of   view   of   the   economy   of   the country and would serve the purpose in the growth of a healthy economy. It would certainly provide guidance to the secured debtors in general in conducting the affairs in a manner that they may not be found defaulting and being made liable for the unsavoury steps contained under sub­ section   (4)   of   Section   13.   At   the   same   time,   more importantly, we must make it clear unequivocally that communication   of   the   reasons   for   not   accepting   the objections taken by the secured borrower may not be taken   to   give   occasion   to   resort   to   such   proceedings which are not permissible under the provisions of the Act.   But   communication   of   reasons   not   to   accept   the objections   of   the   borrower,   would   certainly   be   for   the purpose of his knowledge which would be a step forward towards his right to know as to why his objections have not been accepted by the secured creditor who intends to resort 98 to harsh steps of taking over the management/business of viz. secured assets without intervention of the court. Such a person in respect of whom steps under Section 13(4) of the Act are likely to be taken cannot be denied the right to know the reasons of non­acceptance and of his objections.   It is true, as per the provisions under the Act, he may not be entitled to challenge the reasons communicated or the likely action of the secured creditor at that point of time unless his right to approach the Debts Recovery Tribunal as provided under Section 17 of the Act matures on any measure   having   been   taken   under   sub­section   (4)   of .” Section 13 of the Act   (emphasis supplied) In   the   present   case,   however,   we   are   concerned   with   the provisions of I&B Code dealing with the resolution process. The dispensation provided in the I&B Code is entirely different. In terms of Section 30 of the I&B Code, the decision is taken collectively   after   due   negotiations   between   the   financial creditors who are constituents of the CoC and they express their opinion on the proposed resolution plan in the form of votes, as per their voting share. In the meeting of CoC, the proposed resolution plan is placed for discussion and after full interaction in the presence of all concerned and the resolution professional, the constituents of the CoC finally proceed to exercise   their   option   (business/commercial   decision)   to 99 approve or not to approve the proposed resolution plan. In such a case, non­recording of reasons would not  per se  vitiate the collective decision of the financial creditors. The legislature has   not   envisaged   challenge   to   the   “commercial/business decision”   of the financial creditors taken collectively or for that matter their individual opinion, as the case may be, on this count.      63. It was then contended that NCLAT committed manifest error in not calling upon the dissenting financial creditors to respond   to   the   applications   filed   in   the   concerned   appeals pending   before   it,   including   with   a   prayer   to   allow   the resolution applicant to revise the resolution plan. We find no merits in this submission. The reliefs claimed in the stated application filed before the NCLAT would not take the matter any   further.   For,   it   is   enough   for   the   dissenting   financial creditors to disapprove the proposed resolution plan by voting as per its voting share, based on commercial decision. Indeed, if   the   opposition   of   the   dissenting   financial   creditors   is   in regard   to   matter(s)   within   the   jurisdiction   of   the   Tribunal 100 ascribable to Sections 30(2) or 61(3), then the situation may be somewhat different. But that is not in issue in these cases.   64. As regards the application by the resolution applicant for taking his revised resolution plan on record, the same is also devoid of merits inasmuch as it is not open to the Adjudicating Authority to entertain a revised resolution plan after the expiry of the statutory period of 270 days. Accordingly, no fault can be   found   with   the   NCLAT   for   not   entertaining   such application.   65. The counsel appearing for the resolution applicant and the stakeholders supporting the resolution plan were at pains to persuade us to exercise powers under Article 142 of the Constitution of India. Inasmuch as, in both the cases, the vote of approval exceeded more than 66% of the voting share of the financial   creditors   and   yet   the   benefit   of   the   amended provision could not be availed, as it came only during the pendency of the appeal before the NCLAT. The submission is that this Court may set aside the order passed by the Tribunal 101 and relegate the parties in both the cases, before the NCLT for considering the proceedings afresh in light of the amended provision   reducing   the   threshold   requirement   of   percent   of voting share of financial creditors to 66%.  We are afraid, it is not possible for us to exercise powers under Article 142 of the Constitution which will result in issuing directions in the teeth of   the   provisions   as   applicable   to   the   cases   on   hand.   We, therefore, decline to accede to this request. Having answered the core issues and to avoid prolixity, we do not wish to dilate on the exposition in other reported decisions relied upon by the counsel.  66. As a result, we hold that the NCLAT has justly concluded in   the   impugned   decision   that   the   resolution   plan   of   the concerned   corporate   debtor(s)   has   not   been   approved   by requisite percent of voting share of the financial creditors; and in absence of any alternative resolution plan presented within the statutory period of 270 days, the inevitable sequel is to initiate liquidation process under Section 33 of the Code. That view is unexceptional. Resultantly, the appeals must fail. 102 In   view   of   the   above,   the   appeals   are   dismissed.   The 67. companion applications also stand dismissed. No order as to costs.                                                             …………………………..….J.       (A.M. Khanwilkar)     …………………………..….J.                  (Ajay Rastogi) New Delhi; February 5, 2019.