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2022 (2) TMI 1414 - AT - Insolvency and BankruptcyValidity of Resolution Plan - Preferential Transaction - Treatment meted under the Resolution Plan submitted by the Successful Resolution Applicant - distribution mechanism approved by the CoC in its 18th meeting of the members of CoC - abusive treatment being meted out to them under the garb of commercial wisdom of the CoC . I. Whether the Adjudicating Authority erred in approving the Resolution Plan which proposes extinguishing claim to the Fixed Deposit Holders without discharging their payments in full contravenes the statutory provisions of the NHB Act and RBI Act? II. Whether the NHB Act or RBI Act as the case may be mandate the total payment to the Fixed Deposit Holders even though the corporate debtor is undergoing CIRP under the I B Code 2016? III. Whether section 238 of the Insolvency and Bankruptcy Code 2016 overrides the RBI Act and NHB Act? Is the approved Resolution Plan stipulates extinguishment of the claims to the Fixed Deposits without discharging their payments in full valid and legal in terms of the Code? IV. Whether the transactions involving repayment to Fixed Deposits Upon maturity of their deposit would fall within the ordinary course of business for Respondent No. 1 as specified under section 28(1)(k) of the Code? V. Whether Respondent No. 1 is legally authorised for disbursing loans and investments despite its failure to repay Fixed Deposit holders as per the terms of their deposits? VI. Whether any payment made against the F.D. s in terms of their deposits during CIRP would be categorised as a preferential transaction? HELD THAT - It is essential to point out that the issues raised in the present Appeal were also raised in the Company Appeals VINAY KUMAR MITTAL RASHMI SHRIVASTAVA JESUIT RESEARCH AND DEVELOPMENT SOCIETY JIV PRAKASH VIDYAPEETH INDIAN SOCIAL INSTITUTE THE NAGALAND JESUIT EDUCATIONAL AND CHARITABLE SOCIETY THE DELHI JESUIT SOCIETY AMAR SEVA SAMITHI PRESENTATION SOCIETY OF INDIA BHOLA DEVELOPERS PVT LTD AND OTHERS VERSUS DEWAN HOUSING FINANCE CORPORATION LTD RESERVE BANK OF INDIA COMMITTEE OF CREDITORS OF DEWAN HOUSING FINANCE CORPORATION LIMITED AND OTHERS. 2022 (1) TMI 1412 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI . These appeals were also filed against the same Resolution Plan by the fixed deposit holders of DHFL raising the same issues. We have already decided on the Appeals mentioned above with detailed orders on the issues raised here. Therefore we do not think it proper to decide again the same issues raised in the present Appeal. Impugned Order needs no interference - appeal disposed off.
Issues Involved:
1. Whether the Adjudicating Authority erred in approving the Resolution Plan, which proposes extinguishing claims to the Fixed Deposit Holders without discharging their payments in full, contravening the statutory provisions of the NHB Act and RBI Act? 2. Whether the NHB Act or RBI Act mandates the total payment to the Fixed Deposit Holders even though the corporate debtor is undergoing CIRP under the I & B Code, 2016? 3. Whether section 238 of the Insolvency and Bankruptcy Code, 2016, overrides the RBI Act and NHB Act? 4. Whether the transactions involving repayment to Fixed Deposits upon maturity of their deposit would fall within the ordinary course of business for Respondent No. 1, as specified under section 28(1)(k) of the Code? 5. Whether Respondent No. 1 is legally authorised for disbursing loans and investments despite its failure to repay Fixed Deposit holders as per the terms of their deposits? 6. Whether any payment made against the F.D.'s in terms of their deposits during CIRP would be categorised as a preferential transaction? Issue-wise Detailed Analysis: Issue 1: The Fixed Deposit holders argued that the Resolution Plan, which extinguishes their claims without full payment, contravenes the NHB Act and RBI Act. They claimed that the NHB Act mandates repayment of deposits strictly by the terms of such deposit, aiming to secure the interests of depositors. The Appellants contended that the CoC's decision was arbitrary and discriminatory, treating them unfairly compared to other financial creditors. Issue 2: The Appellants asserted that the NHB Act and RBI Act mandate full payment to deposit holders, even during the CIRP. They argued that the provisions of the NHB Act, which secure public deposits, should take precedence over the IBC. However, the Respondents countered that neither the NHB Act nor the RBI Act guarantees full payment to deposit holders in case of insolvency and that the IBC provisions should prevail. Issue 3: Section 238 of the IBC, which provides that the provisions of the IBC override other laws, was a key point of contention. The Respondents argued that the IBC, being a later and special statute, should prevail over the NHB Act and RBI Act. The Tribunal agreed, stating that the IBC's provisions override those of the NHB Act and RBI Act, and the Resolution Plan, which extinguishes claims without full payment, is valid under the IBC. Issue 4: The Appellants argued that repayment to Fixed Deposits upon maturity should be considered an ordinary course of business under section 28(1)(k) of the IBC. However, the Respondents contended that any payment during the CIRP would violate the moratorium imposed under section 14 of the IBC, which prohibits alienation or disposal of any asset of the Corporate Debtor. Issue 5: The Appellants questioned the legality of Respondent No. 1 disbursing loans and investments while failing to repay Fixed Deposit holders. The Respondents maintained that such actions were necessary to keep the Corporate Debtor as a going concern and were within the Administrator's duties. The Tribunal found no illegality in these actions, as they were aimed at preserving the Corporate Debtor's business. Issue 6: The Appellants contended that any payment made to Fixed Deposit holders during the CIRP would be categorized as a preferential transaction. The Respondents argued that the IBC prohibits preferential treatment to any class of creditors during the CIRP. The Tribunal agreed, stating that preferential payments to Fixed Deposit holders would violate the IBC's provisions and the principle of equitable treatment of creditors. Conclusion: The Tribunal concluded that the issues raised in the present appeal were already decided in the earlier Company Appeals (C.A. (AT)(INS) Nos. 506, 507 & 516 of 2021), which involved the same Resolution Plan and similar issues raised by Fixed Deposit holders. The Tribunal upheld the earlier decision, stating that the Resolution Plan, which extinguishes claims without full payment, is valid under the IBC, and the IBC's provisions override those of the NHB Act and RBI Act. The appeal was disposed of accordingly, with no order as to costs.
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