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2018 (9) TMI 137 - Tri - Insolvency and BankruptcyCorporate insolvency proceedings - legitimate claims of workmen - proceedings initiated in this case at the instances of the corporate debtor - Held that - In the absence of any supporting materials brought to the notice of this Bench that any legitimate claims of workmen were rejected unreasonably, this Bench could not find any fault with the Resolution Professional, who was unable to consider the claim which has been directed to file by the workmen in the prescribed format giving all the necessary data. Failure from the side of the workmen in submitting the required data in the prescribed format for the consideration of the claims cannot be a ground for rejection of the resolution plan in hand. Nothing produced to prove that it has been implemented or that the workmen are entitled to have any benefit under the alleged pay revision of 2007. The reasons for rejection of claims, non inclusion of arrears of 1997 pay revisions and non-implementation of 2007 pay scale submitted by the resolution professional being supported with proof it appears to me that none of the objections raised on behalf of the workmen at the time of consideration of the approval of the resolution plan in hand are found devoid of any merit. Upon commencement of the CIRP any legal proceedings if any initiated against the corporate debtor is to be stayed and there is no bar on any suit or proceedings instituted by the corporate debtor as against an operational creditor. That being so pendency of a civil suit filed by the corporate debtor as against the intervener in this case is not at all a bar to proceedings initiated in this case at the instances of the corporate debtor. No other objections raised on any other sides regarding approval of the resolution plan. The Resolution Plan in hand fulfilled to meet the requirements as referred to in sub-section (2) of section 30 of the Code. However, it is pertinent to note that this is a unique Resolution Plan rather a plan for repayment of outstanding debts found due from the corporate debtor to various stake holders and to its workmen and staff. The corporate debtor/ corporate applicant was an industry originally engaged in wagon manufacturing which is at present running at loss due to intense competition following the entry of new players. High level of debt and increased loses prompt the corporate applicant to file the application in hand. The Resolution Plan has been prepared on the strength of a letter no.2018/M(W)/300/2 dated 12.02.2018 addressed to the Corporate Debtor/ Corporate Applicant from the Ministry of Railways (Railway Board), Government of India, who recommended closure of Corporate Applicant company. Therefore, what is to be understood from the Resolution Plan is that on the basis of allocation of fund in the budget 2018-19, the Corporate Applicant would like to settle its liabilities and provides a repayment plan. So, the Resolution Plan in hand is a repayment plan for settlement of liabilities of the Corporate Applicant so that the closure of the Corporate Applicant can be effected, instead of liquidating the company. On going through the letter above and the Resolution Plan, it is understood that the Resolution Applicant in the instant case has prepared the Resolution Plan and submitted to the CoC for its approval through the Resolution Professional and it is that Resolution Plan came up for consideration and on further examination, satisfied that the said plan meets the requirements as stipulated under section (2) of section 30 of Insolvency & Bankruptcy Code, 2016. Therefore, the Resolution Plan deserves approval. Accordingly, the Resolution Plan is approved upon the following directions. ORDER - The Resolution Plan, which is approved by the CoC with a voting share of hundred percentage is hereby approved under provisions of section 31(1) of the Insolvency & Bankruptcy Code, 2016, which will be binding on the Corporate Debtor/Corporate Applicant, its employees, members, creditors, coordinators and other stakeholders involved in the Resolution Plan. 2. The resolution plan of the company shall come into force with immediate effect. 3. The moratorium order passed under Section 14 shall cease to have effect. 4 The Resolution Professional shall forward all records relating to the conduct of the Corporate Insolvency Resolution Process and the Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded on its database.
Issues Involved:
1. Rejection of ex-employees' claims by the Resolution Professional. 2. Non-inclusion of pay revision arrears (1992, 1997, 2007) in the Resolution Plan. 3. Legality of a civil suit filed by the Corporate Debtor against an Operational Creditor during the moratorium period. 4. Approval of the Resolution Plan under the Insolvency and Bankruptcy Code, 2016. Detailed Analysis: 1. Rejection of Ex-Employees' Claims by the Resolution Professional: The application was filed by the Ex-employees Welfare Association representing over 4000 former employees of the Corporate Applicant. They claimed that their demands for pay revision arrears from 1992, 1997, and 2007 were rejected by the Resolution Professional. The Tribunal found that the application required no consideration at the end of the approval process for the Resolution Plan. It was noted that the Resolution Professional had complied with all directions given by the Tribunal, including reconsidering the claims and uploading reasons for rejection. The main reason for rejection was the non-furnishing of data required in Form-E under Regulation 9 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016. Therefore, the Tribunal found no fault with the Resolution Professional's actions. 2. Non-Inclusion of Pay Revision Arrears (1992, 1997, 2007): The Tribunal addressed the issue of non-inclusion of pay revision arrears. It was found that the 1992 pay revision had been implemented, and the arrears were admitted as admissible claims. The Resolution Professional provided evidence that the 1997 pay revision would be effective prospectively from 01.10.2010, with no arrears payable for the period prior to this date. Regarding the 2007 pay revision, no data was furnished to prove its implementation in the Corporate Applicant. The Tribunal concluded that there was no violation of the direction in the order from W.P. No.372(W) of 2000 by the Hon'ble High Court at Calcutta, and the objections raised were without merit. 3. Legality of a Civil Suit Filed by the Corporate Debtor Against an Operational Creditor During the Moratorium Period: An application was filed by an Operational Creditor seeking to declare a civil suit filed by the Corporate Debtor as not maintainable due to the moratorium under Section 14 of the I&B Code. The Tribunal clarified that Section 14 does not bar the Corporate Debtor from initiating legal proceedings against an Operational Creditor. The moratorium only applies to suits or proceedings against the Corporate Debtor. Therefore, the civil suit filed by the Corporate Debtor did not violate any provisions of the I&B Code or Regulations, and the application was dismissed. 4. Approval of the Resolution Plan Under the Insolvency and Bankruptcy Code, 2016: The Corporate Applicant, a public limited company owned by the Government of India under the Ministry of Railways, filed for corporate insolvency resolution process. The Resolution Plan, which provided for the closure of the Corporate Debtor by discharging its debts, was prepared based on a budgetary allocation of ?417.10 crores by the Ministry of Railways. The Committee of Creditors (CoC) approved the Resolution Plan with 100% voting share. The Tribunal found that the Resolution Plan met all requirements under Section 30(2) of the I&B Code and Regulation 9 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016. The plan was therefore approved and became binding on the Corporate Debtor and all stakeholders involved. Conclusion: In conclusion, the Tribunal dismissed the applications filed by the Ex-employees Welfare Association and the Operational Creditor, finding no merit in their claims. The Resolution Plan, which provided for the closure of the Corporate Debtor and repayment of its debts, was approved as it met all statutory requirements. The moratorium order ceased to have effect, and the Resolution Professional was directed to forward all records to the Insolvency and Bankruptcy Board of India.
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