2020 (6) TMI 346 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - HELD THAT - As per provision of Sub-section (6) of section 60 of I B Code, it is always open to a Creditor to proceed with the suit or arbitration proceeding, if pending, on completion of the Moratorium. However, once a Creditor/'Financial Creditor' or 'Operational Creditor' files its claim before the 'Resolution Professional' and the same is taken into consideration by the 'Successful Resolution Applicant' and while submitting the plan or the revised plan providing them same treatment as has been given to the other similarly situated 'Financial Creditors'/'Operational Creditors', the 'Financial Creditors'/'Operational Creditors', thereafter cannot take the benefit of sub-section (6) of section 60 of the 'I B Code' nor they can pray to pursue the suit or arbitration proceeding or to file a fresh suit or arbitration proceeding for the same claim. In terms of section 31, once the 'Resolution Plan' is found to be in accordance with section 30(2) and is duly approved by the Adjudicating Authority, it is binding on all the stakeholders including the 'Financial Creditor'/'Operational Creditor' and the 'Corporate Debtor' etc. The approved 'Resolution Plan' including the revised 'Resolution Plan', as per offer as inconsonance with section 30(2) of the 'I B Code', the Appellants cannot be allowed to pursue the alternative remedy of suit or arbitration proceeding even if it is pending - the 3rd Respondent ('Successful Resolution Applicant') to provide Appellant(s) with the same treatment as has been given to the other similarly situated 'Financial Creditors' and pay pro-rata amount i.e., same percentage of claim amount, as made available to other similarly situated 'Financial Creditors'. Appeal disposed off.

Summary

Issues:
Challenge to impugned order dated 7th December, 2018 under common question of law.

Analysis:
1. The Appellant(s) entered into a 'Term Loan Agreement' with the 'Corporate Debtor' for a sum of ?6.03 Crore, which was to be repaid by 13th December, 2009. After the failure of the 'Corporate Debtor' to repay the loan, the Appellant(s) sent Demand and Statutory Notices for the outstanding debt.

2. A suit was filed by the 'Corporate Debtor' in the High Court of Kolkata seeking conversion of the outstanding amount into equity shares based on an alleged oral Agreement. The Appellant(s) invoked the Arbitration clause under the Term Loan Agreement, leading to a series of legal actions culminating in Arbitration proceedings.

3. While Arbitration was pending, an application under section 7 of the Insolvency and Bankruptcy Code, 2016 was filed by 'IDBI Bank' against the 'Corporate Debtor', resulting in the admission of Corporate Insolvency Resolution Process. The Arbitration proceedings were adjourned due to this development.

4. The Appellant(s) filed claims with the Resolution Professional, which were rejected for not meeting the timeline specified by regulations. An Interlocutory Application was filed to challenge this rejection.

5. The Committee of Creditors approved a 'Resolution Plan' submitted by 'SREI Multiple Asset Investment Trust' with 92.74% voting shares, which was subsequently approved by the Adjudicating Authority under the I&B Code.

6. The Appellant(s) challenged the 'Resolution Plan' citing non-compliance with section 30(2) of the I&B Code and the plan's failure to address their claims as Financial Creditors.

7. The Appellant(s) sought to either pursue Arbitration proceedings under section 60(6) of the I&B Code or challenge the Resolution Plan.

8. The 3rd Respondent, the 'Successful Resolution Applicant,' offered a revised plan, which the Appellate Tribunal found justified. The Appellant(s) were given the opportunity to accept the revised offer.

9. The 3rd Respondent agreed to consider the Appellant(s)' claims and provide treatment similar to other Financial Creditors. The Appellant(s) expressed a desire to continue with Arbitration, while the Resolution Applicant aimed for final settlement during the Resolution process.

10. The Tribunal directed the 3rd Respondent to provide the Appellant(s) with treatment similar to other Financial Creditors, emphasizing that once a Resolution Plan is approved under the I&B Code, stakeholders cannot pursue alternative remedies like Arbitration or legal proceedings.

11. The Tribunal disposed of the appeals with the above directions, stating that no further relief could be granted, and no costs were awarded.