2019 (12) TMI 513 - AT - Insolvency and Bankruptcy

Validity of Resolution plan - grievance of the Appellant is that the 'Resolution Plan' is discriminatory as it reduced the claim of the appellant to ₹ 1,375,000/- in place of admitted claim of ₹ 2,21,92,393/- - HELD THAT - The amounts towards 'ESIC Employees Contribution'; 'ESIC Employers Contribution'; 'Provident Fund Employees' and 'Provident Fund Employer' do not come within the meaning of the 'Operational Debt'. Therefore, the Appellant - 'Sales Tax Department' claim an Operational Creditor cannot equated with the ESIC Employees Contribution; ESIC Employers Contribution; Provident Fund Employees and Provident Fund Employers and no discrimination can be alleged. In absence of any infirmity in the impugned order, this appeal is dismissed.

Summary

Issues:
Challenge to discriminatory Resolution Plan reducing appellant's claim.

Analysis:
The appeal was filed by the Sales Tax Department, State of Maharashtra, against the Order of the Adjudicating Authority approving the Resolution Plan submitted by 'Osian India'. The appellant contended that the Resolution Plan discriminated against them by reducing their claim to ?1,375,000 from the admitted claim of ?2,21,92,393 towards JAG-VAT-D-008 Stock. The counsel for the 2nd Respondent argued that the Sales Tax Department is an 'Operational Creditor'. The Plan allocated 6.1% of the claim to the Sales Tax Department, while the Commissioner of Customs was allocated 5.1%. However, ESIC Employees Contribution, ESIC Employers Contribution, Provident Fund Employees, and Provident Fund Employers were provided with 100% of the amount.

The Tribunal examined the allocation to different creditors, noting the specific amounts proposed in the Resolution Plan. The table presented detailed information on various creditors, their categories, types, and the proposed amounts. The Tribunal emphasized that the amounts allocated to ESIC and Provident Fund categories did not fall under 'Operational Debt'. Therefore, the Tribunal concluded that the Sales Tax Department's claim, as an Operational Creditor, could not be equated with the claims of ESIC and Provident Fund categories, and no discrimination could be alleged.

In the absence of any identified flaws in the impugned order, the Tribunal dismissed the appeal and ruled that no costs were to be awarded. The judgment highlighted the importance of distinguishing between different types of claims and the criteria for allocation under a Resolution Plan, emphasizing the legal principles governing the treatment of creditors in insolvency proceedings.