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2021 (7) TMI 1085 - AT - Insolvency and BankruptcyValidity of approved Resolution Plan - challenge on the ground that in the Resolution Plan towards statutory dues and claims the approval was settled at Nil Value and the claims stood extinguished - HELD THAT - The Reply of Respondent No. 2 refers to the approved Resolution Plan at Annexure R-1 page 63 and reference is made to Paragraph 3.5 which deals with proposal for Operational Creditors where the Resolution Applicant stated that Liquidation Value payable towards full and final extinguishment of statutory dues and claims is expected to be Nil and the Liquidation Value is insufficient to meet the dues of even secured Financial Creditors and thus the minimum statutory discharge payable is Nil and so Nil payment has been proposed towards statutory dues and claims. Adjudicating Authority has considered the Revised Position of claims received as on 28th October, 2020 (Paragraph 4 of the Impugned Order) which showed that the amounts claimed by the Financial Creditors admitted were ₹ 20,904,644,307/- and that the dues of Operational Creditors (Workman and Employees) admitted were of ₹ 82,253,253/-. It is recorded that amounts claimed by Operational Creditors (Statutory Dues, Liabilities including outstanding government authority dues, taxes, etc.) were ₹ 4,827,297,551/- (which includes amounts admitted on provisional as well as contingent basis). Then there are dues which were admitted by Operational Creditors (Other than Workmen and Employees and statutory dues) which were of R. 213,192,038/- (including amount admitted on/contingent basis). Considering these amounts and the Liquidation Value, it is difficult to find fault with the Resolution Plan as has been approved. There is substance in the submissions made by the Resolution Professional that if the Corporate Debtor was to go in Liquidation, the Appellant would get Nil amount. The claims made by the Appellant need not be accepted to find fault in the Resolution Plan - appeal dismissed.
Issues:
Appeal against Impugned Order approving Resolution Plan in Corporate Insolvency Resolution Process (CIRP) of Corporate Debtor. Adherence to Insolvency and Bankruptcy Code (IBC) provisions. Liquidation Value computation for Operational Creditors. Discrimination in Resolution Plan against Operational Creditors. Approval by Committee of Creditors (CoC). Binding nature of Resolution Plan post-approval. Detailed Analysis: 1. Appeal Against Impugned Order: The Asst. Commissioner of CGST & Central Excise filed an Appeal against the Impugned Order approving the Resolution Plan in the CIRP of the Corporate Debtor. The Resolution Plan was accepted by the Adjudicating Authority based on the approval by the Committee of Creditors (CoC). 2. Adherence to IBC Provisions: The Appellant argued that the Resolution Plan did not follow the necessary provisions of IBC and its regulations. Specifically, the Appellant claimed that the Liquidation Value for Operational Creditors was not properly computed as per Section 30(2)(b) of IBC. The Appellant raised concerns about the evasion of penalty and duty payable to the Central Government. 3. Liquidation Value Computation for Operational Creditors: The Appellant contended that the Resolution Plan did not adequately address the amounts payable to Operational Creditors in case of Liquidation, as required by IBC. The Resolution Plan proposed Nil payment towards statutory dues and claims for Operational Creditors, which the Appellant argued was unjust and discriminatory. 4. Discrimination Against Operational Creditors: The Appellant highlighted that while a class of Operational Creditors was partially paid under the Resolution Plan, statutory dues were excluded, leading to discrimination. The Resolution Plan's summary indicated proposed payments for various stakeholders, including Operational Creditors, with Nil allocation for statutory dues. 5. Approval by Committee of Creditors (CoC): The Respondent Resolution Professional defended the Resolution Plan's approval by the CoC, emphasizing compliance with IBC provisions and commercial wisdom. The Resolution Plan's provisions for Workmen/Employees and other Operational Creditors were justified based on the Valuation Report and the insufficient Liquidation Value. 6. Binding Nature of Resolution Plan: Considering the Supreme Court judgment in a related matter, the Tribunal held that the approved Resolution Plan was binding on the Appellant. The Tribunal dismissed the Appellant's claims of faults in the Resolution Plan, concluding that there was no substance in the Appeal. In conclusion, the Tribunal dismissed the Appeal against the Impugned Order approving the Resolution Plan, emphasizing the Resolution Plan's compliance with IBC provisions and the CoC's approval. The Tribunal found no fault in the Resolution Plan's treatment of Operational Creditors, including the exclusion of statutory dues, and upheld the binding nature of the Resolution Plan post-approval.
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