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2024 (12) TMI 1151 - AT - IBCExtinguishment of claim - non-implementation of resolution plan - whether the Adjudicating Authority, on the grounds of non-implementation of the plan, could have revived the gratuity dues claims of the Respondent and given directions to pay gratuity dues to the Respondent without consideration by the CoC? - HELD THAT - After the Corporate Debtor is admitted into CIRP, RP invites claims and after collating and updating the same in the Information Memorandum thereafter invites potential resolution applicants to submit their respective resolution plans before the CoC. The plans are deliberated and the best plan approved by the CoC in exercise of their commercial wisdom is placed before the Adjudicating Authority which then arrives at a subjective satisfaction that the plan conforms to the requirements as provided under Section 30(2) of IBC and thereafter grants its approval to the Resolution Plan. The Adjudicating Authority while approving the Resolution Plan has to see that the plan does not contravene any requirements set out under Section 30(2) of the IBC and also that the Resolution Plan can be carried out efficiently and satisfactorily as per Section 31(1) of the IBC. Approval of a resolution plan by the Adjudicating Authority is statutorily recognized as a closure to all claims that creditors or other relevant entities may have against a Corporate Debtor unless it is challenged within the statutorily prescribed time-limit. It is significant to note that once the Adjudicating Authority approves the Resolution Plan, the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan. Facts on record show that this aspect of the plan was never challenged by the Respondent. Thus, the plan had undisputably attained finality. Further the SRA has already made payments to the stakeholders as per the approved plan. The Appellant have placed reliance on the legal precept laid down by the Hon ble Supreme Court in Ghanshyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited and Ors. 2021 (4) TMI 613 - SUPREME COURT to contend that belated claims cannot be taken up for inclusion in the Resolution Plan and after placing reliance thereon asserted that the SRA cannot be saddled with the liability of claims which were not part of the plan. The Hon ble Supreme Court has time and again held that it an imperative need to impart finality to the resolution process by protecting an SRA from undecided claims. In the present case, the plan having been approved by the Adjudicating Authority on 16.04.2019, the stage to challenge the plan approval came to an end long time back. Therefore, the Resolution Plan as approved by the Adjudicating Authority has become binding on the Corporate Debtor, creditors, guarantors and other stakeholders involved in the Resolution Plan. Having noticed the contours of IBC and settled jurisprudence, the derivative is crystal clear that no surprise claims should be flung on the SRA in a belated manner. In the present case, there has been a lapse of more than 5 years since approval of the resolution plan. After the Adjudicating Authority had approved the resolution plan, the same was not challenged and had therefore acquired finality thereby vesting a right in favour of the SRA to acquire the Corporate Debtor in terms of the resolution plan. The same vested right therefore cannot be taken away except in accordance with law. Allowing any interference with the plan at this stage by introducing new claims would prejudice the SRA and put the Corporate Debtor into the throes of grave and unpredictable uncertainty at a time when the resolution plan has been implemented and the CoC not in existence anymore. Considering the overall architecture of the IBC and the Court evolved jurisprudence, it is clear that the Adjudicating Authority is not empowered to modify the resolution plan approved by the Committee of Creditors. In the eventuality of the Adjudicating Authority finding that the approved resolution plan requires certain modifications, it can only make suggestions regarding the modification of plan to the CoC but cannot unilaterally modify the plan - There is no material on record to demonstrate any such non-compliance or default or failure or breach attributable on the part of the SRA in the plan implementation for the Corporate Debtor to warrant interference by the Adjudicating Authority. The Adjudicating Authority has clearly exceeded its jurisdiction - Both the impugned orders are set aside. The Appeals are allowed.
Issues Involved:
1. Whether the claims for gratuity dues of ex-employees not on the payroll as of the insolvency commencement date were extinguished under the approved resolution plan. 2. Whether the Adjudicating Authority had the jurisdiction to revive gratuity claims and direct payment without CoC consideration. 3. Whether the resolution plan could be modified or reviewed post-approval by the Adjudicating Authority. Issue-wise Detailed Analysis: 1. Extinguishment of Gratuity Claims: The primary issue was whether the claims for gratuity dues by ex-employees who were not on the payroll as of the insolvency commencement date (06.02.2018) were extinguished under the approved resolution plan. The Appellant argued that the resolution plan, approved on 16.04.2019, provided payments only to employees on the payroll as of the insolvency commencement date. The plan had attained finality as it was approved by the CoC with a 77.8% vote share, upheld by the NCLAT, and affirmed by the Supreme Court. The Respondents admitted they were not on the payroll as of 06.02.2018, and thus, their claims were not covered under the plan. The Tribunal emphasized that the "clean-slate" principle, as established in precedents like Essar Steel and Ghanashyam Mishra, meant that no claims outside the plan could be enforced post-approval. 2. Jurisdiction of Adjudicating Authority: The second issue was whether the Adjudicating Authority had jurisdiction to revive gratuity claims and direct payment without CoC's consideration. The Tribunal found that the Adjudicating Authority exceeded its jurisdiction by allowing the IAs and directing payments not contemplated under the resolution plan. Regulation 39(9) of the IBBI Regulations allows creditors aggrieved by non-implementation of a resolution plan to seek directions, but the Tribunal noted that the Respondents did not demonstrate non-implementation of the plan. The Tribunal reiterated that the Adjudicating Authority could not modify the plan post-approval without CoC's consent, as the plan becomes binding on all stakeholders once approved. 3. Modification or Review of Resolution Plan: The third issue addressed whether the resolution plan could be modified or reviewed post-approval by the Adjudicating Authority. The Tribunal highlighted that once a resolution plan is approved, it cannot be modified or reviewed unilaterally by the Adjudicating Authority. The legislative intent of the IBC is to provide finality to the resolution process, preventing any surprise claims post-approval. The Tribunal cited multiple Supreme Court judgments reinforcing that the plan must be implemented as approved, without post facto amendments. The Tribunal concluded that the Adjudicating Authority's action of directing gratuity payments was an impermissible modification of the plan. Conclusion: The Tribunal set aside the impugned orders of the Adjudicating Authority, concluding that it had exceeded its jurisdiction by allowing the IAs and directing payments not contemplated under the resolution plan. The appeals were allowed, emphasizing the importance of finality in the resolution process and adherence to the approved plan without post-approval modifications or reviews.
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