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2021 (9) TMI 437 - AT - Insolvency and BankruptcyDistribution of the dues in the Resolution Plan including dues of statutory authorities - Resolution plan already approved - dues of appellant approved by CoC in its commercial wisdom - case of appellant is that its quite surprising that the Appellant - Operational Creditor has been given a 99% haircut and the Learned Counsel is expressing doubts in the manner in which CIRP was conducted - HELD THAT - Hon'ble Supreme Court in the matter of GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. 2021 (4) TMI 613 - SUPREME COURT has held that once a resolution plan is duly approved by the Adjudicating Authority under subsection (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. As it is found that Committee of Creditors in the present matter has taken a discussion with regard to distribution of the dues in the Resolution Plan including dues of statutory authorities, it is found that this is a matter where interference in the impugned order accepting a Resolution Plan is called for. The dues of the Appellant are admittedly operational dues and the Resolution Plan has dealt with the dues. The appeal cannot be entertained.
Issues:
1. Allocation of Sales Tax dues in the Resolution Plan. 2. Concerns regarding the conduct of Corporate Insolvency Resolution Process (CIRP). 3. Examination of the distribution of dues in the Resolution Plan. 4. Application of the judgment of the Hon'ble Supreme Court in a related matter. Issue 1: Allocation of Sales Tax dues in the Resolution Plan The Appellant, Department of Sales Tax, filed an Appeal against an order accepting a Resolution Plan in a case involving a Corporate Debtor. The Appellant had claimed Sales Tax dues of ?14,70,50,763, but the approved Resolution Plan allocated only ?14,50,000 to Operational Creditors, representing a mere 1% of the claimed dues. The Resolution Professional defended the Plan, stating that the Corporate Insolvency Resolution Process was conducted properly, and the Committee of Creditors had approved the distribution in their commercial wisdom. Issue 2: Concerns regarding the conduct of Corporate Insolvency Resolution Process (CIRP) The Appellant's Counsel expressed surprise at the significant reduction in the Operational Creditor's dues, referring to it as a "99% haircut." Doubts were raised about the manner in which the CIRP was conducted, questioning the fairness of the process. Issue 3: Examination of the distribution of dues in the Resolution Plan The impugned order discussed the upfront payment and distribution of funds in the Resolution Plan. The Plan proposed an upfront payment to creditors, including Operational Creditors, in specific amounts and through designated sources. The Plan detailed the treatment of various categories of creditors, outlining the allocation of funds and the mechanisms for fund infusion. Issue 4: Application of the judgment of the Hon'ble Supreme Court Reference was made to a judgment of the Hon'ble Supreme Court regarding the binding nature of approved Resolution Plans on all stakeholders. The Court held that once a Resolution Plan is approved, claims provided in the Plan shall stand frozen and be binding on the Corporate Debtor and all stakeholders. Any claims not included in the Plan shall stand extinguished. Based on this legal principle, the Appellate Tribunal declined to interfere with the impugned order accepting the Resolution Plan, as the Committee of Creditors had appropriately addressed the dues of the Appellant in the Plan. In conclusion, the Appeal was disposed of at the admission stage without costs, as the Appellate Tribunal declined to admit it based on the considerations of the approved Resolution Plan and the legal principles outlined in the judgment of the Hon'ble Supreme Court.
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