2022 (6) TMI 1314 - Tri - Insolvency and Bankruptcy

Seeking directions on the Respondent to resolve the claim of the Applicant - contention raised by the Learned Counsel for the Applicant as per the latest list of creditors as on 20.01.2020, that the claim submitted by the Applicant herein was shown as 'under verification' and hence no amounts were paid to the Applicant under the Resolution Plan - HELD THAT - In the present case, it is seen that the Resolution Plan in respect of the Corporate Debtor was approved by this Tribunal on 20.01.2020. The present Application is filed before this Tribunal on 29.07.2021. Further, it is also seen a contingency fund to the tune of Rs. 7 Crore was kept in the Resolution Plan for a period of 6 months from the date of approval of the Resolution Plan. The said 6 months expired on 20.07.2020 and admittedly the present Application is filed before this Tribunal only on 29.07.2021. The relief as sought by the Applicant cannot be granted, in terms of the Judgment rendered by the Hon'ble Supreme Court in the matter of Ghanashyam Mishi a and sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited Ors. 2021 (4) TMI 613 - SUPREME COURT where it was held that once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. Application dismissed.

Summary

Issues:
1. Application under section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking reliefs for resolving the claim of the Applicant.
2. Dispute regarding the claim submitted by the Operational Creditor in the Corporate Insolvency Resolution Process (CIRP).
3. Allegation of failure to submit supporting documents by the Operational Creditor leading to the claim being under verification.
4. Interpretation of the binding nature of a resolution plan on all stakeholders post-approval by the Adjudicating Authority.

Analysis:
1. The judgment deals with an application filed under section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking directions to resolve the claim of the Applicant, an Operational Creditor, in the Corporate Debtor's insolvency proceedings. The Applicant had submitted a claim of Rs. 22,26,524/-, which was under verification as per the latest list of creditors as on 20.01.2020.

2. The dispute arose as the Applicant alleged that no amounts were paid under the Resolution Plan approved by the Tribunal, while the Respondent contended that the Applicant failed to submit necessary supporting documents. The Resolution Plan had a contingency fund for six months from approval, which expired on 20.07.2020, and the Applicant filed the current application on 29.07.2021, post the expiration of the contingency fund.

3. The Respondent argued that the Applicant's claim was under verification due to the lack of supporting documents. The Tribunal considered the submissions of both parties and noted the importance of complying with the requirements of the Insolvency and Bankruptcy Code to ensure the revival of the Corporate Debtor and protect the interests of all stakeholders involved in the resolution process.

4. The Tribunal referred to a Supreme Court decision emphasizing the binding nature of a resolution plan on all stakeholders post-approval by the Adjudicating Authority. The Court highlighted that once a resolution plan is approved, claims provided in the plan stand frozen and are binding on the Corporate Debtor and all stakeholders. Any claims not part of the approved plan stand extinguished, preventing the initiation or continuation of proceedings regarding such claims.

5. Based on the legal principles outlined by the Supreme Court, the Tribunal dismissed the Applicant's relief sought in the current application, citing the binding nature of the resolution plan and the extinguishment of claims not included in the approved plan. The judgment emphasized the legislative intent behind freezing claims post-approval to enable a fresh start for the resolution applicant and ensure the viability of the resolution plan for the Corporate Debtor's revival.