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2020 (1) TMI 1603 - Tri - Insolvency and BankruptcyAdmission of claims of the applicant - rejection of Resolution Plan approved by the Committee of Creditors - direct modification of the Resolution Plan for approval in accordance with law - HELD THAT - There is no violation or contravention of the Insolvency and Bankruptcy Code, 2016 and Regulation. The respondent has categorically stated that the claim which has been rejected is that of the interest from the commencement of the Corporate Insolvency Resolution Process till the submission of the claim, in other words it was during the moratorium period. In both the applications and in the written submission as well or oral submission, the Counsel for the applicant did not clarify this point. There is no basis for this application, when the larger part of the claim has been accepted, litigations are also pending, it is not appropriate on the part of the applicant to file an application for rejection of the Resolution Plan. The treatment to the applicant and other Operational Creditors are in no way different. All the Operational Creditors shall stand at the same footing as per the waterfall mechanism under Section 53 of the Insolvency and Bankruptcy Code, 2016. There is no valid reason to reject the Resolution Plan. The Committee of Creditors has considered all the points. The Corporate Debtor is an ongoing concern . The Committee of Creditors has taken into consideration the interest of all the stakeholders. Application dismissed.
Issues Involved:
1. Admission of claims by the Resolution Professional. 2. Rejection of the Resolution Plan approved by the Committee of Creditors. 3. Alleged delay and wrongful classification of claims by the Resolution Professional. 4. Compliance with the Insolvency and Bankruptcy Code, 2016 and related regulations. Issue-wise Detailed Analysis: 1. Admission of Claims by the Resolution Professional: The applicant, represented by the Government of India through the Office of the Assistant Commissioner, GST & Central Excise, filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking the admission of claims amounting to Rs. 29,72,08,531. The applicant argued that the Resolution Professional acknowledged their claim of Rs. 348.57 crores on 26.09.2019 and an additional claim of Rs. 497.94 lakhs on 17.10.2019. However, the Resolution Professional admitted only Rs. 220.57 crores as a contingent claim and rejected Rs. 125.02 crores. The applicant contended that the Resolution Professional delayed the admission of the claim, which prejudiced the Department. The Tribunal concluded that the applicant's claim related to interest accrued during the Corporate Insolvency Resolution Process, which should not be included. Therefore, the Resolution Professional rightfully rejected the claim. 2. Rejection of the Resolution Plan Approved by the Committee of Creditors: The applicant filed another application under Section 60(5) seeking the rejection of the Resolution Plan approved by the Committee of Creditors. The applicant argued that the Resolution Plan made a NIL allocation for their claims, which were statutory dues. They contended that the Committee of Creditors failed to discharge its responsibility towards the applicant, an Operational Creditor. The Tribunal noted that the liquidation value of the Corporate Debtor was NIL, and as per the waterfall mechanism under Section 53 of the Code, the applicant was not entitled to any payment. The Tribunal found no contravention of Regulation 38, which mandates priority payment to Operational Creditors. Hence, the Resolution Plan's approval by the Committee of Creditors was upheld. 3. Alleged Delay and Wrongful Classification of Claims by the Resolution Professional: The applicant alleged that the Resolution Professional delayed the admission of their claim and wrongfully classified it, affecting the Department's interests. The Tribunal observed that the Corporate Insolvency Resolution Process commenced on 07th July 2017, and the applicant submitted their claims only on 18th September 2019. The Tribunal found that the applicant's claim included interest for the period after the commencement of the Corporate Insolvency Resolution Process, which was not permissible. The Resolution Professional had accepted the claim filed beyond the 90-day period, as per the pre-amended regulations. Thus, the Tribunal concluded that there was no delay or wrongful classification by the Resolution Professional. 4. Compliance with the Insolvency and Bankruptcy Code, 2016, and Related Regulations: The applicant argued that the Resolution Plan did not comply with the provisions of the Insolvency and Bankruptcy Code, 2016, and related regulations. The Tribunal referred to the Hon'ble Supreme Court's judgment in the Essar Steel case, which emphasized that the Committee of Creditors must consider the interests of all stakeholders, including Operational Creditors, and maximize the value of the Corporate Debtor's assets. The Tribunal found that the Committee of Creditors had taken into account these key features and that the Resolution Plan met the requirements of Section 30(2) of the Code. Therefore, the Tribunal dismissed the allegations of non-compliance. Conclusion: The Tribunal dismissed both applications (CA (IB) No. 162/CTB/2019 and CA (IB) No. 176/CTB/2019), concluding that the Resolution Professional had rightfully rejected the applicant's claim related to interest accrued during the Corporate Insolvency Resolution Process and that the Resolution Plan approved by the Committee of Creditors complied with the Insolvency and Bankruptcy Code, 2016, and related regulations. The Tribunal found no merit in the applicant's allegations and upheld the Resolution Plan, ensuring the Corporate Debtor's status as an ongoing concern.
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