2024 (11) TMI 16 - AT - IBC

Challenge to approval of the Resolution Plan - HELD THAT - The entire admitted claim in question for provident fund and gratuity having been paid in the Resolution Plan, there are no ground to interfere with the order of the Adjudicating Authority of approving the Resolution Plan. The jurisdiction of the NCLT and NCLAT while considering the Plan approved by the Committee of Creditors ( CoC ) has a limited jurisdiction. The remit of the jurisdiction is to examine as to whether the Plan is in compliance of Section 30, sub-section (2) of the Insolvency and Bankruptcy Code, 2016 (IBC). Judgment of the Hon ble Supreme Court in K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS 2019 (2) TMI 1043 - SUPREME COURT is referred in this context, where the Hon ble Supreme Court held ' The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable.' The gratuity and provident fund having been admitted in full and paid in full in the Resolution Plan, compliance of provisions of IBC are fully met. There are no error has been committed by the Adjudicating Authority in approving the Resolution Plan. There are no grounds to interfere with the impugned order. The Appeal is dismissed.

Summary

Issues:
Challenge to order approving Resolution Plan; Rights of workmen in Resolution Plan; Compliance with IBC provisions.

Analysis:
The Appeal challenges the order approving the Resolution Plan filed by the Resolution Professional. The Resolution Plan was approved by the Adjudicating Authority, leading to the filing of this Appeal. The Appellant, a workers' union, raised concerns about the Resolution Plan not adequately securing the rights of the workmen, including continued employment and retiral benefits. The Appellant emphasized the importance of the Resolution Plan addressing provident fund and gratuity entitlements of the workers.

During the hearing, the Successful Resolution Applicant (SRA) filed an affidavit confirming the full admission and payment of the workmen's claims in the Corporate Insolvency Resolution Process (CIRP). The SRA assured that the Resolution Plan covered provident fund and gratuity dues at actuals, as outlined in the approved Plan. The affidavit detailed the payment of the entire admitted claim amount, including provident fund and gratuity, leaving no grounds for grievance by the Appellant.

The Adjudicating Authority found that the Resolution Plan adequately addressed the provident fund and gratuity dues of the Corporate Debtor, as stipulated in Clause 6.6 (iii) of the Plan. The jurisdiction of the NCLT and NCLAT in such matters is limited to verifying compliance with Section 30(2) of the IBC. Reference was made to a Supreme Court judgment highlighting the non-justiciability of the commercial decisions of the Committee of Creditors (CoC) in approving Resolution Plans.

Given the full admission and payment of provident fund and gratuity dues in the Resolution Plan, the Adjudicating Authority's approval was deemed compliant with the IBC provisions. Consequently, the Appeal was dismissed, and any pending Interlocutory Applications were disposed of without costs. The judgment reaffirmed the importance of upholding the decisions of the CoC within the framework of the IBC, emphasizing the non-justiciability of their commercial wisdom in the resolution process.