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2019 (5) TMI 1930 - Tri - Insolvency and BankruptcyApproval of Resolution Plan - Eligibility of Resolution Professional to place the Resolution Plan before the COC for voting - eligibility of COC to vote on such plan - absence of ascertaining compliance with the mandatory provisions of the Code - HELD THAT - It is very clear from the proceedings that Financial Creditor holding security interest over the assets of Corporate Debtor were given higher amount from out of the Resolution Fund than those who are not holding the security interest or holding security interest which is lower in value. This grouping of Financial Creditors does not amount to any discrimination. The creditors who are having valuable assets are to be given higher percentage from out of the Resolution Fund than those who are holding less value of the assets. Though, Canara Bank was allotted higher amount than the Applicant, it cannot be said there is discrimination in the allocation of share from the Resolution Fund and the same is done basing on the value of security. There are no ground to direct Resolution Applicant again to revive the allotment basing on the percentage of the claim admitted by Resolution Professional of the amounts due to Financial Creditors. Application dismissed.
Issues Involved:
1. Eligibility of the Resolution Professional to place the Resolution Plan before the Committee of Creditors (COC) for voting. 2. Allegations of discrimination in the Resolution Plan against certain financial creditors. 3. Compliance of the Resolution Plan with mandatory provisions of the Insolvency and Bankruptcy Code (IBC), 2016. Issue-Wise Detailed Analysis: 1. Eligibility of the Resolution Professional: The applications filed by IDBI Bank and Indian Overseas Bank under Section 60(5) of the IBC, 2016, sought a declaration that the Resolution Professional was not eligible to place the Resolution Plan before the COC for voting. They argued that the COC is not eligible to vote on such a plan without ascertaining compliance with the mandatory provisions of the Code. The Resolution Professional contended that her role was to ensure the completeness of the Resolution Plans before presenting them to the COC and that she had complied with her duties, including certifying the compliance of the Resolution Plan with applicable law. 2. Allegations of Discrimination: The applicants argued that the Resolution Plan dated 11.12.2018 was discriminatory and contrary to the Code and applicable law. They contended that the plan offered settlements to certain financial creditors that were lower than their pro-rata entitlement, thus treating them unequally compared to other financial creditors. The Resolution Applicant and Canara Bank countered that the classification of financial creditors into Category A and Category B was based on the security held by the creditors and the criticality of the assets to the Corporate Debtor's operations. The Resolution Applicant further argued that the categorization was made to maximize the value to the lenders and that there was no discrimination in the distribution of funds. 3. Compliance with Mandatory Provisions: The applicants claimed that the Resolution Professional and the COC members failed to verify whether the Resolution Plan complied with the mandatory provisions of the IBC. They alleged that the Resolution Professional did not certify the plan's compliance with applicable law and that the COC proceeded to vote on the plan without fulfilling their statutory obligations. The Resolution Professional and the Resolution Applicant maintained that the plan was compliant with the IBC and that the COC's commercial wisdom in approving the plan with an 81.39% majority should not be challenged. Findings and Conclusion: The Tribunal found that the Resolution Plan was approved by the COC with an overwhelming majority of 81.39%, and the objections raised by the applicants were duly recorded and considered. The Tribunal noted that the categorization of financial creditors into Category A and Category B was based on the security interest and the criticality of the assets, which did not amount to discrimination. The Tribunal emphasized that the commercial wisdom of the COC in approving the Resolution Plan is non-justiciable and should not be interfered with by the Adjudicating Authority. The applications IA 24 of 2019 and IA 121 of 2019 were dismissed, with the Tribunal concluding that there was no ground to direct the Resolution Applicant to revise the allotment based on the percentage of the claim admitted by the Resolution Professional. The Tribunal upheld the COC's commercial decision and the compliance of the Resolution Plan with the IBC, 2016.
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