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2022 (11) TMI 955 - AT - Insolvency and BankruptcyValidity of Resolution Plan approved u/s 30 of the Insolvency and Bankruptcy Code, 2016 - It is the main argument of the Learned Counsel for the Appellant that the Farmers were given 100% of the dues whereas the Appellant has given only 1% of the dues and therefore the Resolution Plan is discriminatory and is in violation of Section 30(2) of the Code. HELD THAT - It is seen from the record that the Corporate Debtor is a Sugar Industry and the Farmers are an integral part of the Sugar Industry. We find force in the contention of the Learned Sr. Counsel for the Respondent that more than 4500 Farmers and their families are dependent on the Corporate Debtor factory for their survival and the Plan would not be implementable without making payments to the Farmers as the dues have been pending for the last two years. The Minutes of the CoC Meeting shows that even the Secured Financial Creditors accepted that 100% payment should be made to the Farmers who are the backbone of the Sugar Industry. There is no evidence on record to substantiate that indeed the Applicants seeking to intervene had formed a group and given the representation to the RP at the appropriate time to consider them as one class. Their Claims were filed in an individual capacity and there is no Application on record seeking to treat all of them in one group, at that point of time and therefore their contention that they were not included in the Meeting of the CoC, is untenable. This Tribunal is of the considered opinion that there is no embargo for the classification of the Operational Creditors into separate/different classes for deciding the way in which the money is to be distributed to them by the CoCs. The Plan was approved by 100% Voting Share way back on 11.11.2019 almost three years ago and has also been implemented. This Tribunal is of the considered opinion that the Operational Creditors were paid as per Section 30(2)(b) of the Code and read together with Regulation 38 of the CIRP Regulations, the Operational Creditors are entitled to receive only such money that are payable to them as per Section 53 of the Code. It is the final discretion of the Collective Commercial Wisdom in relation to (1) The amount to be paid (2) The quantum of money to be paid, to a certain category or the incidental category of Creditors, balancing the interests of the Stakeholders and the Operational Creditors , as the case may be. The limited judicial review available to Adjudicating Authority lies within the four corners of Section 30(2) of the Code. Appeal dismissed.
Issues Involved:
1. Approval of the Resolution Plan by the Adjudicating Authority. 2. Dismissal of the Intervention Application by M/s. Alfa Technology & Services. 3. Alleged discrimination against Operational Creditors in the Resolution Plan. 4. Commercial wisdom of the Committee of Creditors (CoC). 5. Applicability of Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016. 6. Judicial review and scope of the Adjudicating Authority and Appellate Tribunal. Issue-wise Detailed Analysis: 1. Approval of the Resolution Plan by the Adjudicating Authority: The Appeals challenged the Impugned Orders dated 04.11.2019 & 11.11.2019, wherein the Adjudicating Authority (NCLT, Mumbai Bench) approved the Resolution Plan under Section 30 of the Insolvency and Bankruptcy Code, 2016. The Resolution Plan was unanimously approved by 100% vote of the Members of the CoC. 2. Dismissal of the Intervention Application by M/s. Alfa Technology & Services: MA 3432/2019, filed by M/s. Alfa Technology & Services seeking intervention in MA 3271/2019, was dismissed on the ground that the Applicant lacked locus standi due to the absence of a proper Power of Attorney. The Adjudicating Authority noted that the Applicants had not filed the proper Power of Attorney representing the other Petitioners. 3. Alleged discrimination against Operational Creditors in the Resolution Plan: The Appellants, who are Operational Creditors, contended that the Resolution Plan was discriminatory as it provided 54.29% of the admitted Claim to Secured Financial Creditors, 11.42% to Unsecured Financial Creditors, 20% to Workmen and Employees, 100% to Farmers, and only 1% to the Appellants. The Tribunal found that Farmers, being integral to the Sugar Industry, were justifiably given 100% of the dues to ensure the Corporate Debtor remained a Going Concern. 4. Commercial wisdom of the Committee of Creditors (CoC): The Tribunal emphasized that the Commercial Wisdom of the CoC is non-justiciable. It cited judgments such as 'K. Sashidhar Vs. Indian Overseas Bank & Ors.' and 'Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta,' which uphold the CoC's discretion in determining payments to different classes of Creditors. 5. Applicability of Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016: The second Respondent argued that Operational Creditors were entitled to 'NIL' payment as per Section 30(2)(b) of the Code. The Tribunal agreed that the Resolution Plan adhered to the provisions of Section 30(2)(b) and Regulation 38 of the Corporate Insolvency Process Regulations, which entitles Operational Creditors to receive payments as per Section 53 of the Code. 6. Judicial review and scope of the Adjudicating Authority and Appellate Tribunal: The Tribunal reiterated that the scope of judicial review by the Adjudicating Authority and Appellate Tribunal is limited to ensuring compliance with Section 30(2) of the Code. It cannot interfere with the Commercial Wisdom of the CoC. The Tribunal cited 'Kalpraj Dharamshi & Anr. Vs. Kotak Investment Advisors Ltd. & Anr.' to emphasize the limited judicial review available. Conclusion: The Tribunal dismissed the Appeal, affirming that the Operational Creditors were paid as per the Code and the Resolution Plan was approved by the CoC's Commercial Wisdom. The Tribunal suggested that the Government and IBBI may examine some minimum entitlement for Operational Creditors based on the amount realized in the Resolution Plan over and above the liquidation value.
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