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2022 (8) TMI 1159 - AT - Insolvency and BankruptcyValidity of Resolution Plan - admissibility of claims - improper classification of claim - HELD THAT - The Resolution Plan was approved by 95.15 % of voting share in 31st Committee of Creditors Meeting dated 13.11.2019. Thus, as per the requirement of Section 30(2)(b) of the Code, the operational creditors of the Corporate Debtor including the Appellant herein, are entitled to a minimum payment of their liquidation value which is Nil in the present case, and therefore the resolution plan of SPTL which proposes NIL payments towards the claims of operational creditors, cannot be called in question on the ground that it contravenes provisions of Section 30(2) of the Code. Hon ble Supreme Court in the case of Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited Ors. 2021 (4) TMI 613 - SUPREME COURT has held that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval Under Section 31 could be continued. Appeal dismissed.
Issues Involved:
1. Classification and admittance of claims by the Resolution Professional (RP). 2. Delay in admitting claims and its impact on the Resolution Plan. 3. Compliance of the Resolution Plan with statutory requirements and its approval by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT). 4. Treatment of statutory dues in the Resolution Plan. 5. Jurisdiction and authority of the Adjudicating Authority in approving the Resolution Plan. Detailed Analysis: Issue 1: Classification and admittance of claims by the Resolution Professional (RP) - The Corporate Insolvency Resolution Process (CIRP) was initiated against the corporate debtor, M/s Ferro Alloys Corporation Limited (FACOR), on the application by Rural Electrification Corporation Limited (RECL) under Section 7 of the Insolvency and Bankruptcy Code (IBC). - The appellant submitted its claim to the RP amounting to Rs. 348.57 crores, which was acknowledged. Subsequently, an additional claim of Rs. 497.94 lakhs was also acknowledged. - The RP categorized the claims under four headings: Amount Admitted, Admitted Liability as Contingent Claim, Not Admitted, and Claim under Review. - The appellant objected to the classification, particularly the contingent claims, and requested the RP to admit the claims where there was no stay by the court. Issue 2: Delay in admitting claims and its impact on the Resolution Plan - The appellant argued that the RP delayed the admittance of claims until 11.11.2019, which jeopardized the CIRP process. - The delay resulted in the information memorandum being materially defective and incomplete, affecting the preparation of the Resolution Plan. - The appellant contended that the Resolution Plan did not allocate for the admitted claim of Rs. 220.58 crores due to the RP's delay. Issue 3: Compliance of the Resolution Plan with statutory requirements and its approval by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT) - The Resolution Plan was approved by 95.15% of the voting share in the 31st CoC meeting. - As per Section 30(2)(b) of the IBC, operational creditors are entitled to a minimum payment of their liquidation value, which was Nil in this case. - The Tribunal noted that the Resolution Plan proposing NIL payments towards operational creditors' claims did not contravene Section 30(2) of the IBC. Issue 4: Treatment of statutory dues in the Resolution Plan - The appellant argued that the Resolution Plan extinguished statutory dues without allocation, contrary to the ruling in the Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta. - The respondent contended that the RP verified the claims as per Regulation 13 of the CIR Regulations, rejecting claims for interest accrued after the Insolvency Commencement Date (ICD). - The Supreme Court in Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited & Ors. held that once a resolution plan is approved, all claims not part of the plan are extinguished, including statutory dues. Issue 5: Jurisdiction and authority of the Adjudicating Authority in approving the Resolution Plan - The Tribunal emphasized that the commercial decision of the CoC is paramount and should not be interfered with by the NCLT. - The Tribunal dismissed the appeal, stating that the Resolution Plan complied with the mandatory contents of Section 30(2) of the IBC and that the appellant's claims were rightly extinguished as per the approved plan. Conclusion: - The appeal was dismissed, and the Resolution Plan approved by the CoC and the NCLT was upheld. - The Tribunal reiterated the importance of the commercial wisdom of the CoC and the binding nature of an approved resolution plan on all stakeholders, including statutory authorities.
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